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FROM

THE BUSINESS
HISTORICAL
SOCIETY iNC

A N

I N U I R Y

INTO THE

Nature and Caufes

OF THE

WEALTH OF NATIONS.

By ADAM SMITH, LL. D. and F. R. S. '

Formerly Profeflbr of Mofal Philofophy in the Univerfity of Glasgow.

IN TWO VOLUMES.

VOL, L

LONDON:

PRINTED FOR W. STRAHAN ; AND T. CADELL, IN THE STRAND,

MDCCLXXVI,

■ - ■ - ( - ■ I I II 111 mil

Fublijhed by the fame Author,.

>)\ - THE

)

THEORY OF MORAL SENTIMENTS:

An Essay tov/ards an Analyfis of ' the Pnndples By whicR.
j .' 'Men naturally judge concerning the Condu£l and CharaiSler,
firft: of their, Neighbours, and afterwards of tiiemfelves.

A DISSERTATION on the Q:s.\Gi:^:t^ "L^^ov hJi:s^

' 1 A H

6 A

CONT ENTS

\ OFT RE

-TT^- F IRST VOLUAJ E,,

WfRODXjCTION AND •J'E'V^Ncl§4f''''tH^: WORK "^^^-'^'il-- • Page • I

B O O K L

■ >v • A :i o

of the Caufes of ' M^r8\^ment Mri the pro-
du<Jlive Powers of Labour, and of the .Qrdier ^
^according to which its Produce is naturally diftri-
buted among the different Ranks of the People 5

CHAP, h

Of the Dhifion cf Labour • — — ibdd.

C H A H.

Of the Principle which gives Qccafon to the Divifion of Labour 1 6

C H A. P. III.

T^bat the -H>ivi/ion ef Labour is limited by the Extent of the

Market - - - 2t

A 2

Of the Origin and Ufe of Money - - Page 27

O/^ /y^^" real and neminal Price of CommoditieTi or their
Price in Labour, and their Price in Money - 35

C H A P. VI. ^^^^''^^'^^
1 Of the component Parts of the Price of Commodities, xy, . 56

C H A P. VII.

' (y the natural and market Price of Commodities ^ 66

' C H A P- VIII. -'^"^■^'^'i ^"^i-^^^

' Of the Wages of Labour - - ^^ 'K''"*- ^"'■^^^76

Of the Profits of Stock - - - • ■ 108

' C H A P. X.

■ O/* Wages and Profit in the dijyerent Employments of Labour ^
and Stock " - ' ' "'^^ i:^^^ ^'^^^^^ 121

|*ART lit. Inequalities in Wages and Profit arifng from the „-
'j8.<J ^^^^^^ 9f different 'Employments of both — 122

Paat ad. Inequalities occafioned by the Policy of Europe ^47^

\j, J.,V , ■4i,:,yf^ HAP. XI,

Of the Rent of Land V 179

,:C!-,0,.N T,E/iN,T,S.
Part Of the "Produce of Land ivhich always affords

'mtlA rw.. i*\r.A \(^ .. .

Part 2d. Of the Produce of hand 'which fome times doesy and
fometimes does not, afford Rent - — zoz

^' pART 3d. Of the Variations in the Proportion between the
refpe&ive Values of that Sort (f Produce ivhich always
affords Rent, and of that which fometimes does, and fometimes
does not afford Rent — — ■ 2^1

DigreJJion concerning the Variations in the Value of Silver dur-
ing the Courfe of the Four laji Centuries.

Firft Period — — ^ i222

Second Period , c 240

y^hird Period — — — 242

Variations in the Proportion .^''^^^^ t^^ refpeSfive Values of
Gold and Silver — — — 264

Grounds of the Sufpicion that the Value of llS^ifie'r^Jiift^oniiTiues'^^
to decreafe - . — — 270

Different Effe5ls of the Progrefs .of Jmpryuement upon the tfal^
, , , Price of three different Sorts of rude Produce ''^^ ' ^yj

Firji Sort - — — — 272

Second Sort - ^^^^'^L'' ^ ' r^'^ ^ '^^^^ 274

" nird Sort ' ^^'^'^ '^^^^ "'^^^ ''^^^ 286

X^Condufon of the jyigreffion concerning the Variations 'iii -ihff-. \
Value of Silver — — — 299

EffeBs of the Progrefs of Improvement upon the real Price of

Manufactures - - . , ..u; v. i..;^ /, ' ;3o6

Conclufion of the Chapter 312

f 9 N f ? t{ ^ s,

BOOK 11^

^£ the Nature^ Accumulation, and Employmei^t

of Stock.

Introduction — — page 327

. CHAP I . 'j^^ >0

Of the Divifion of Stock — ^ «J — 33<^

O/* Money confidered as ' a particular Braflch of the general Stock
of the Society t or of the Rxpence of maintaming the National
Capital — — — 341

o8f - CHAP' III 'i^t^^^ i^ViWsSl^t ■

Of the Accumulation of C^pitqj^ jr 0^ pfoduBive and unprc

duBive Labour — — — 400

■ -sivawnC) •jtfftH.

CHAP. IV.- :^^svttv:)^v^g \

Of Stock lent at Int-ereji ^ — —426

C H A P. V.

Of the dij'erent Employment of Capitals — - 477

§ M * I N t s.

BOOK in.

Of the- 'different Progrcls bf^ Opulence in cHfFerent

Nations..

\n ^^^''^ CHAP. r.

Of the natural' Progrefs of Opulence — - Page 459

C H A P. II.

Of the Difcouragement of Agriculture in the antient State of
Europe after the. Fall of the- B,oman Empire — 466

iViViicA ^JiV^ AS^ V-.Nt \5 0- oVv>o •, d. \u. ^ ... V ..

C H A p. lll<

Of the Rife and Progrefs of Cities and Towns, after the Fall of
the Roman Empire HI *I A H .3 ""

W)W the Commerce of the Towfis contributed to the Improvement
of the Country - ----- ^^.yj.

.q A H 3

1 ^^^^-^^'^Vi ^^^^J)

CONTENTS

O F T H E

SECOND VOLUME.

BOOK IV.
Of Syftems of political Oeconomy.
IntroductioiJ — — Page j

CHAP. I.

Of the Principle of the Commercial or Mercantile Syjlem — 2

CHAP. II.

Of Rejtralnts upon the Importation of fucb Goods from Foreign
Countries as can be produced at Home — 3 ^

CHAP. III.

Of the extraordinary Rejlraints upon the Importation of Goods
of ahnojl all Kindsy from thofe Countries with ivhich the Ba-
lance is fuppofed to be difadvantageous " " SI

J^igrejjion concerning Banks of Depq/it^ particularly concerning
that of Amfierdam — — *~ ^3

CHAP. IV..
Of Dra'wbacks — — — .g^

CONTENTS.

CHAP. V.

Of Bounties - - - - Page 9(s»

Digreffion concerning the Corn 'Trade and Corn Laws - lo^

CHAP. VI.

Of Treaties of Commerce — — — 130)

CHAP. VII.

Of Colonies. - - - — 146

Part I. Of the Motives for ejlablijhing new Colonies ibid.
Part II. Caufes of the Frofperity of new Colonies — 15^

PaUt III. Of the Advantages which Europe has derived from
the Difcovery of America, and from that of a Pajfage to the
^ Eaji Indies by the Cape of Good Hope - — 190

C H A P. VIII.

Of the Agricultural Syjlems, or of thofe Syftems of political
O economy whicB reprefent the Produce of Land, as either
ihe fole or the principal Source of the Revenue and Wealth of
4very Country - — 25^*

Vol. I.

p O^N T E N y §>

\\x»ws\^ivuv,^0 l-^\vvvJ~.^ v\\o^ •^.t^oN'i^ '^■st^^^^^

B O O K V.

Of the Revenue of the Sovereign or Commonweal tn»

C H A P. I.

Of th& Expences of th& Sovereign or Conmonwealth Page 201'
ffAiiT. I. Of the Exp e nee oj Defence - ibm;.

Part II. Of the Expence of Jujice *" . JJ^

Part III. Of the Expence of public Works and pubhc'^^Jf-^

Article i ft*. Of the public WorM and Injlifmion's for fd^
^;^oUtating the Comnierce cf'the-Societ^s^:-^^ - - ^^^"^'^S^

A'R T I c L E 2d , Of tke E^eHpe-'- of-^ipjer- Jnfitm^^^ 'iintl
Education of tbeXouth - , 340

j^H^LCLE- 3d. Gf.tbe^ ^Expence ■ of thV 'Infitutions, fh^}S&. '\
injiru^ion of People of all Jges - \\i\\\k\^'^

Part IV. Of the Expence of fupporting the. Dignity of the
Sovereign. - ■. ^ . _ ^^g,

€onclufion of the Chapter — ^ ^ 410.

C HAP. II.

Of the Sources of the general or public Revenue of the Society 412

Sou:

•■ ^ *Jj T E N T 'k

Part I. Of the Funds or Sources of Revenue which may
peculiarly belong to the Sovereign or Commonwealth Page 412

Article ift. Taxes upon Renf 426
J'axes upon the Renf of Land — ibid.

Taxef *which are proportioned, not to the Rent, but to the P'ro"
duce of Land _ — — —

Taxes upon the Rent of Hoiifes — — 442

Article 2d, Taxes upon "Profit, or upon the Revenue arifing

Taxes upon the Profit of particular 'Employment's 459

Appendix To Articles ift and 2d. Taxes upon the ^Ga-^i ^ih
Q^^tal Value of Lands, Houf^Sf . md Stock .^i ■^\\\\^\ii.6y

Article 3d. Taxes upon the Wages of Lahoi^ ;bi-«[j[oiT4^.

Article 4tli. Taxes which, it is intended, fioould fall indif-
' ferently upon every diferent Specie^. of Mevsme^^ «b^-t5 J0.j'T4y^
Qapitation Taxes - Wv^ ^H^^'i > jbid ^

Taxes upon confumable Commodities — 4^2

C H A P.. III. v^im^^^^d.
Of public Delfts^ . ^ . .KXX

AN INQjaiRY

A N

I N U I R Y

I N TO THE.

NATURE AND CAUSES

O F T H E

WEALTH NATIONS.

INTRODUCTION AND PLAN OF THE WORK-

TH E annual labour of every nation is the fund which ori-
ginally fupplies it with all the neceffaries and conveniencies
of life which it annually confumes, and which confift
always, either in the immediate produce of that labour, or in what
is purchafed with that produce from other nations.

According therefore, as this produce, or what is purchafed
with it, bears a greater or fmaller proportion to the number of thofe
who are to confume it, the nation will be better or worfe fupplied
with all the ncceifaries and conveniencies for which it has occafion.

But this proportion muft in every nation be regulated by two
different circumftances ; firft, by the Ikill, dexterity and judgment
Vol. I. B with

THE NATURE AND CAUSES OF

ion. ^ith which labour is generally applied in it ; and, fecondly, by the
proportion between the number of thofe who are employed in
ufeful labour, and that of thofe who are not fo employed. What-
ever be the foil, climate, or extent of territory of any particular
nation, the abundance or fcantinefs of its annual fupply muft,
in that particular fituation, depend upon thofe two circumftances.

The abundance or fcantinefs of this fupply too feems to de-
pend more upon the former of thofe two circumftances than upon
the latter. Among the favage nations of hunters and fifhers, every
individual who is able to work, is more or lefs employed in ufeful
labour, and endeavours to provide, as well as he can, the neceffaries
and conveniencies of life, for himfelf, and fuch of his family or
tribe as are either too old, or too youngs or too infirm to go a
hunting and fifhing. Such nations, however, are fo miferably poor,
that, from mere want, they are frequently reduced, or, at leaft-,
think themfelves reduced, to the neceffity fometimes of dire<^lly de-
ftroying, and fometimes of abandoning their infants, their old peo-
ple, and thofe afflided with lingering difeafes, to perifli with
hunger, or to be devoured, by wild beafts. Among civilized and
thriving nations, on the contrary, though a great number of people
do not labour at all, many of whom confume the produce of ten
times, frequently of a hundred times more labour than the greater
part of thofe who work ; yet the produce of the whole labour of the
fociety is fo great, that all are often abundantly fupplied, and a
workman, even of the loweft and pooreft order, if he is frugal and
induftrious, may enjoy a greater fliare of the neceflaries and con-
veniencies of life than it is pofTible for any favage to acquire.

The caufes of this improvement, in the produdive powers of
labour, and the order, according to which its produce is naturally

diftributed

THE WEALTH OF NATIONS.

diftributed among the different ranks and conditions of men in the
foclety, make the fubjed of the Firfl Book of this Inquiry.

Whatever be the acftual Hate of the fkill, dexterity, and judg-
ment with which labour is applied in any nation, the abundance
or fcantinefs of its annual fupply, muft depend, during the con-
tinuance of that ftate, upon the proportion between the number of
thofe who are annually employed in ufeful labour, and that of thofe
who are not fo employed. The number of ufeful and produdive
labourers, it will hereafter appear, is every where in proportion to the
quantity of capital ftock which is employed in fetting them to work, and
to the particular way in which it is fo employed. The Second Book,
therefore, treats of the nature of capital ftock, of the manner in
which it is gradually accumulated, and of the different quantities of
labour which it puts into motion, according to the different ways
in which it is employed.

Nations tolerably well advanced as to fklll, dexterity, and judg-
ment, in the application of labour, have followed very different
plans in the general conduct or diredion of it ; and thofe plans
have not all been equally favourable to the greatnefs of its produce.
The policy of fome nations has given extraordinary encouragement
to the induftry of the country; that of others to the induftry of
towns. Scarce any nation has dealt equally and impartially with
every fort of induftry. Since the downfal of the Roman empire,
the policy of Europe has been more favourable to arts, manufac-
tures, and commerce, the induftry of towns ; than to agriculture, the
induftry of the country. The circumftances which feem to have
introduced and eftabliftied this policy are explained in the Third Book.

Though thofe different plans were, perhaps, firft introduced by
the private interefts and prejudices of particular orders of men, with-

B 2 out

THE NATURE AND CAUSES OF

out any regard to, or forefight of, their confequences upon the
general welfare of the fociety ; yet they have given occafion to very
different theories of political oeconomy ; of which fome magnify the
importance of that induftry which is carried on in towns, others of
that which is carried on in the country. Thofe theories have had a
confiderable influence, not only upon the opinions of men of learn-
ing, but upon the public conduct of princes and fovereign ilates. I
have endeavoured, in the Fourth Book, to explain, as fully and dif-
tindly as I can, thofe different theories, and the principal effe(5ts
which they have produced ia different ages and nations.

In what has confifted the revenue of the great body of the
people, or what is the nature of thofe funds which, in different
ages and nations, have fupplied their annual confumption, is treated
of in thefe four firfl Books. The Fifth and laft Book treats of the
revenue of the fovereign, or commonwealth. In this Book I have
endeavoured to fhow ; firfl, what are the necefTary expences of the
fovereign, or commonwealth ; which of thofe expences ought to
be defrayed by the general contribution of the whole fociety ; and
which of them, by that of fome particular part only, or of fome
particular members of the fociety : fecondly, what are the different
methods in which the whole fociety may be made to contribute
towards defraying the expences incumbent on the whole fociety,.
and what are the principal advantages and inconveniencies of each
of thofe methods : and, thirdly and laflly, what are the reafons and
caufes which have induced almoft all modern governments to mort-
gage fome part of this revenue, or to contract debts, and what have
been the effeds of thofe debts upon the real wealth, the annual
produce of the land and labour of the fociety.

BOOK

THE WEALTH OF NATIONS.

BOOK I.

Of the Caufes of Improvement in the produdive Powers of
Labour, and of the Order according to which its Pro-
duce is naturally dillributed among the different Ranks
of the - People..

C H A P. r.

Of the Divifton of Labour.

TH E greateft improvements in the produdlve powers of La-
bour, and the greater part of the fkill, dexterity, and judg"
ment with which it is any where direded, or applied, feem to have
been the effeds of the divifion of labour.

The effects of the divifion of labour, in the general bufinels of
{bciety, will be more eafily underftood, by confidering in what
manner it operates in fome particular manufadures. It is com*
monly fuppofed to be carried furtheft in fome very trifling ones >
not perhaps that it really is carried further in them than in others
of more importance : but in thofe trifling manufadures which are
deftined to fupply the fmall wants of but a fmall number of people,
the whole number of workmen muft neceffarily be fmall ; and thofe
employed in every different branch of the work can often be collected
into the fame workhoufe, and placed at once under the view of the fpec-
tator^ In thofe great manufadures, on the contrary,, which are
deflined to fupply the great wants of the great body of the people,
every different branch of the work employs fo great a number of

workmen*

BOOK
J.

CHAP.
1.

THE NATURE AND CAUSES OF

worlcmen, that it is impoffible to collc61: them all into the fame work-
hoLiie. We can feldom fee more, at one time, than thofe employed
in one fingle branch. Though in them, therefore, the work may
i-eally be divided into a much greater number of parts, than in thofe
of a more trifling nature, the divifion is not near fo obvious, and
has accordingly been much lefs obferved.

To take an example, therefore, from a very trifling manufac-
ture ; but one in which the divifion of labour has been very often
taken notice of, the trade of the pin maker ; a workman not edu-
cated to this hufmefs (which the divifion of labour has rendered
a diftin6t trade), nor acquainted with the ufe of the machinery
employed in it (to the invention of which the fame divifion of
labour has probably given occafion), could fcarce, perhaps, with his
utmoft induftry, make one pin in a day, and certainly could not
make twenty. But in the w^ay in which this bufinefs is now carried
on, not only the whole work is a peculiar trade, but it is divided
into a number of branches, of which the greater part are likewife
peculiar trades. One man draws out the wire, another ftraights it,
a third cuts it, a fourth points it, a fifth grinds it at the top for re-
ceiving the head ; to make the head requires two or three diftinfl
operations ; to put it on, is a peculiar bufinefs, to whiten the pins is
another ; it is even a trade by itfelf to put them into the paper ;
and the important bufinefs of making a pin is, in this manner, di-
vided into about eighteen diftin<ll operations, which in fome manu-
factories are all performed by diftind hands, though in others the fame
man will fometimes perform two or three of them. I have feen a
fmall manufadory of this kind where ten men only were employed,
and where fome of them confequently performed two or three
diftinCl operations. But though they were very poor, and there-
fore but indifferently accommodated with the neceflary machinery,
they could, when they exerted themfelves, make among them about

8 twelve

THE WEALTH OF NATIONS.

twelve pounds of pins in a day. There are in a pound upwards of C H^A P.

four thoufand pins of a middling fize. Thofe ten perfons, there- < /— — '

fore, could make among them upwards of forty- eight thoufand pins
m a day. Each perfon, therefore, making a tenth part of forty-
eight thoufand pins, might be confidered as making four thoufand
eight hundred pins in a day. But if they had all wrought feparately
and independently, and without any of them having been educated
to this peculiar bufmefs, they certainly could not each of them have
made twenty, perhaps not one pin in a day ; that is, certainly,
not the two hundred and fortieth, perhaps not the four thoufand
eight hundredth part of what they are at prefent capable of per-
forming, in confequenCe of a proper divifion and combination of
their different operations.

In every other art and manufadure, the effeds of the divifion
of labour are fimilar to what they are in this very trifling one ;
though, in many of them, the labour can neither be fo much fub-
divided, nor reduced to fo great a fimplicity of operation. The di-
vifion of labour, however, fo far as it can be introduced, occafions,
in every art, a proportionable increafe of the produdive powers of
labour. The feparation of different trades and employments from
one another, feems to have taken place, in confequence of this
advantage. This feparation too is generally carried furthefl: in
thofe countries which enjoy the highefl: degree of induftry and im-
provement ; v/hat is the work of one man, in a rude ftate of fociety,
being generally that of feveral, in an improved one. In- every im-
proved fociety, the farmer is generally nothing but a farmer ; the
manufacturer nothing but a manufadurer. The labour too which-
is neceffary to produce any one complete manufacture, is almoft
always divided among a great number of hands. How many
different trades are employed in each branch of the linen and woollen
manufactures, from the growers of the flax and the wool, to the

bleachers

THE NATURE AND CAUSES OF

bleaciiers and fmoolhers of the linen, or to the dyers and dreffers of
the cloth 1 The nature of agriculture, indeed, does not admit of fo
many fubdivifions of labour, nor of fo complete a feparation of one
bufinefs from another, as manufadures. It is impoGTible to feparate
f6 entirely, the bufinefs of the grazier from that of the corn-farmer,
as the trade of the carpenter is commonly feparated from that of the
fmith. The fpinner is almofi: always a diftin£t perfoii from the
weaver; but the ploughman, the harrower, the fower of the feed,
and the reaper of the corn, are often the Lime. The occafions for
thofe different forts of labour returning with the different feafons of
the year, it is impoffible that one man fhould be conftantly employ-
ed in any one of them. This impoffibility of making fo complete
and entire a feparation of all the different branches of labour em-
ployed in agriculture, is perhaps the reafon why the improve-
ment of the produdive powers of labour in this aft, does not
always keep pace with their improvement In manufadures. The
moft opulent nations, indeed, generally excel all their neighbours in
agriculture as well as in manufadures; but they are commonly more
diftinguifhed by their fuperiority in the latter than in the former.
Their lands are in general better cultivated, and having more la-
bour and cxpence beftowed upon them, produce more, in propor-
tion to the extent and natural fertility of the ground. But the
fuperiority of produce is feldom much more than in proportion to
the fuperiority of labour and expence. In agriculture, the labour
of the rich country is not always much more produdive than that
of the poor ; or, at leaft, it is never fo much more produdive, as it
commonly is in manufadures. The corn of the rich country, there-
fore, will not always, in the fame degree of goodncfs, come cheaper
to market than that of the poor. The corn of Poland, in the fame
degree of goodnefs, is as cheap as that of France, notwithftanding
the fuperior opulence and improvement of the latter country. The
corn of France is, in the corn provinces, fully as good, and in moft

years

THE WEALTH OF NATIONS,

years nearly about the fame price with the corn of England, C H^A P.
though, in opulence and improvement, France is perhaps in- v— -v— ^
ferior to England. The lands of England, however, are better
cultivated than thofe of France, and the lands of France are faid
to be much better cultivated than thofe of Poland. But though
the poor country, notwithftanding the inferiority of its culti-
vation, can, in fome meafure, rival the rich in the cheapnefs and
goodnefs ©f its corn, it can pretend to no fuch competition in its
manufaftures ; at leaft if thofe manufaflures fuit the foil, climate,
and fituation of the rich country. The filks of France are better
and cheaper than thofe of England, becaufe the filk manufaflure
does not fuit the climate of England. But the hardware and the
coarfe woollens of England are beyond all comparifon fuperior to
thofe of France, and much cheaper too in the fame degree of
goodnefs. In Poland there are faid to be fcarce any manufaflures
of any kind, a few of thofe coarfer houfehold manufa6lures ex-
cepted, without which no country can well fubfift.

This great increafe of the quantity of work, which the fame
number of people are capable of performing, in confequence of
the divifion of labour, is owing to three different circumftances ;
firft, to the increafe of dexterity in every particular workman ;
fecondly, to the faving of the time which is commonly loft iix
palTrng from one fpecies of work to another; and laftly, to the
invention of a great number of machines which facilitate and
abridge labour, and enable one man to do the work of many.

First, the improvement of the dexterity of the workman ne-
celfarily increafes the quantity of the work he can perform, and
the divifion of labour, by reducing every man's bufinefs to fome
one fimple operation, and by making this operation the fole em-
ployment of his life, necefTarily increafes very much the dexterity

Vol. I. C of

THE NATURE AND CAUSES OF

B O^O K of the workman. A common fmith, who, though accuftomed to
V— -v-*-* handle the hammer, has never been ufed to make nails, if upon,
fome particular occafion he is obliged to attempt it, will fcarce, I
am affbred, be able to make above two or three hundred nails in,
a day, and thofe too very bad ones. A fmith who has been accuf-i
tomed to make nails, but whofe fole or; principal bufmefs has not
been that of a nailer, can feldom with his utmoft diligence make
more than eight hundred or a thoufand nails in a day. I have
feen feveral boys under twenty years of age who had never exer-
cifed any other trade but that of making nails, and who, when,
they exerted themfelves, could make, each of them, upwards of
two thoufand three hundred nails in a day. The making of a^
nail, however, is by no means one of the fmipleil operations. The
fame perfon blows the bellows, ftirs or mends the fire as there is
occafion, heats the iron, and forges every part of the nail: In
forging the head too he is obliged to change his tools. The different
operations into which the making of a pin, or of a metal button,,
is fubdivided, are all of them much m.ore fmiple, and the dex-
terity of the perfon, of whofe life it has been the fole bufinefs
to perform them, is ufually much greater. The rapidity with
which fome of the operations of thofe manufa6lures are performed,
exceeds what the human hand could, by thofe who had never feen.
them, be fuppofed capable of acquiring.

Secondly, the advantage which is gained by faving the time
commonly loft in palling from one fort of work to another, is
much greater than we fliould at firft view be apt to imagine it»
It is impoffible to pafs very quickly from one kind of work to an^
other, that is carried on in a different place, and with quite differ^
ent tools. A country weaver, who cultivates a fmall farm, mud,
lofe a good deal of time in paffing from his loom to the field, and
from the field to his loom. When the two trades can be car-
A ried

THE WEALTH OF NATIONS.

ried on in the fame worklioufe, the lofs of time is no doubt much ^
lefs. it is even in this cafe, however, very confiderable. A man v-*J'
c'ommonly faunters a little in turning his hand from one fort of
employment to another. When he firrt begins the new work lie
is feldom very keen and hearty ; his mind, as they fay, doss not
go to it, and for fome time he rather trifles than applies to good
purpofe. The habit of fauntering and of indolent carelefs ap-
plication, which is naturally, or rather necefTarily acquired by
every country workman who is obliged to change his work and
his tools every half hour, and to apply his hand in twenty different
ways almoft every day of his life ; renders him almoft always floth-
ful and lazy, and incapable of any vigorous application even on
the moft prefling occafions. Independent, therefore, of his de-
ficiency in point of dexterity, this caufe alone muft always reduce
confiderably the quantity of work which he is capable of perform-
ing.

Thirdly, and laftly, every body muft be fenfible how much
labour is facilitated and abridged by the application of proper ma-
chinery. It is unneceffary to give any example. I fliall, therefore-,
only obferve that the invention of all thofe machines by which
labour is fo much facilitated and .abridged, feems to have been
originally owing to the divifion of labour. Men are much more
likely to difcover eafier and readier methods of attaining any objed
when the whole attention of their minds is dire6led towards that
lingle obje6l, than when it is dilTipated among a great variety of
things. But in confequence of the divifion of labour, the whole
of every man's attention comes naturally to be directed towards
fome one very finiple objedl. It is naturally to be expe^ed, there-
fore, that fome one or other of thofe who are employed in each
particular branch of labour fhould foon find out eafier and readier
methods of performing their own particular work wherever the

C 2 nature

THE NATURE AND CAUSES OF

B O^O K nature of it admits of fuch improvement. A great part of the
V— ' machines employed in thofe manufaftures in which labour is moft
fubdivided, were originally the inventions of common workmen-,
who, being each of them employed in fome very fimple operation,
naturally turned their thoughts towards finding out eafier and
readier metliods of performing it. Whoever has been much
accuftomed to vifit fuch manufa<5lures, muft frequently have
been fliown very pretty machines, which were the inventions of
common workmen in order to facilitate and quicken their own
particular part of the work. In the firft fire-engines, a boy was
conflantly employed to open and fhut alternately the communi-
cation between the boiler and the cylinder, according as the pidon
either afcended or defcended. One of thofe boys, who loved to
play with his companions, obferved that, by tying a firing from
the handle of the valve, which opened this communication, to
another part of the machine, the valve would open and fhut
without his alliftance,. and leave him at liberty to divert himfelf
with his play-fellows. One of the greateft improvements that
has been made upon this machine, fince it was firft invented^
was in this manner the difcovery of a boy who wanted to fave
his own labour.

All the improvements in machinery, however, have by no
means been the inventions of thofe who had occafion to ufe the
machines. Many improvements have been made by the ingenuity
of the makers of the machines, when to make them became
the bufinefs of a peculiar trade ; and fome by that of thofe who
are called philofophers or men of (peculation, whofe trade it is,
not to do any thing, but to obferve every thing and who, upon
that account, are often capable of combining together the powers
of the moft diftant and diflimilar obje6ls. In the progrefs of
fociety, philofophy or fpeculation becomes, like every other em-
ployment.

THE WEALTH OF NATIONS.-

ployment, the principal or fole trade and occupation of a particular C
clafs of citizens. Like every other employment too, it is fub- v-
divided into a great number of different branches, each of which
affords occupation to a peculiar tribe or clafs of philofophers j and
this fubdivifion of employment in philofophy, as well as in every
other bufinefs, improves dexterity and faves time. Each indi-
vidual becomes more expert in his own peculiar branch, more
work is done upon the whole,, and the q^uantity of. fcience is. con-
fiderably increafed by it..

I-T is the great multiplication of- the produ6lions of all the
different arts, in confequence of the divifion of. labour, which
occafions in a well governed fociety, that univerfal opulence which
extends itfelf to the loweft ranks of the people. Every workman
has a great quantity of his own work to difpofe of beyond what he
himfelf has occafion for ^ and every other workman being exa6f:ly
in the fame (ituation, , he is enabled to exchange a great quantity
of his own goods for a great quantity, or, what. comes to the fame
thing, for the price of a great quantity of theirs. He fupplies
them abundantly with what they have occaiion for, and they
accommodate him as amply with what he has occaiion for, and a
general plenty diffufes itfelf through all the different ranks of the
fociety.

Observe the accommodation of the mofl common artificer or
day-labourer in a civiUzed and thriving country, and you will
perceive that the. number of people of whofe induftry a part,
though but a fmall part, has been employed in procuring him this
accommodation exceeds all computation. The woollen coat, for
example, which covers the day-labourer, as coarfe and rougl>
as it may appear, is the produce of the joint labour of a great
multitude of workm.en. The fliepherd, the forter of the wool,

the

14 THE NATURE AND CAUSES OF

B 0^0 K the wool-comber or carder, the dyer, the fcribbler, the fplniier, *
— J the weaver, the fuller, the dreffer, with many others, muft all
join their different arts in order to complete even this homely
production. How many merchants and carriers, befides, muft
have been employed in tranfporting the materials from fome of
thofe workmen to others who often live in a very diftant part
of the country ! how much commerce and navigation in particu-
lar, how many {hip-builders, failors, fail-makers, rope-makers,
muft have been employed in order to bring together the different
^rugs made ufe of by the dyer, which often come from the remoteft
corners of the world ! What a variety of labour too is neceffary
in order to produce the tools of the meaneft of thofe workmen !
To fay nothing of fuch complicated machines as the ftiip of the
failor, the mill of the fuller, or even the loom of the weaver, let
ns confider only what a variety of labour is requifite in order to
form that very fimple machine, the fliears with which the fhepherd
clips the wool. The miner, the builder of the furnace for fmelt-
ing the ore, the feller of the timber, the burner of the charcoal
to be made ufe of in the fmelting houfe, the brick-maker, the
brick-layer, the workmen who attend the furnace, the mill-
-wright, the forger, the fmith, muft all of them join their differ-
ent arts in order to produce them. Were we to examine, in the
fame manner, all the different parts of his drefs and houfehold
furniture, the coarfe linen ftiirt which he wears next his fkin,
the ftiOes whidh cover his feet, the bed which he lies on, and all
the different parts which compofe it, the kitchen grate at which
he prepares his victuals, the coals which he makes ufe of for that
purpofe, dug from the bowels of the earth, and brought to him
perhaps by a long fea and a long land carriage, all the other utenfils
of his kitchen, all the furniture of his table, the knives and forks,
the earthen or pewter plates upon which he fefves up and divides
ills victuals, the different hands employed in preparing his bread

and

THE WEALTH OF NATIONS.

1<S

and his beer, the glafs window which lets in the heat and the light, C H^A P.
and keeps out the wind and the rain, with all the knowledge and u^-v^
art requifite for preparing that beautiful and happy invention,
without which thefe northern parts of the world could fcarce have
afforded a very comfortable habitation, together with the tools of
all the different workmen employed in producing thofe different
conveniencies if we examine,. I fay, all thefe things, and confider
what a variety of labour is employed about each of them, we fhall
be fenfible that without the afTiftance and co-operation of many
thoufands, the very meaneft perfon in a civilized country could not
be provided, even according to v/hat we very falfely imagine the eafy
and fimple manner in which he is commonly accommodated. Com-
pared, indeed, with the more extravagant luxury of the great, his
accommodation muft no doubt appear extremely fimple and eafy ^
and yet it may be true perhaps that the accommodation of an
European prince does not always fo much exceed that of an in-
duftrious and frugal peafant, as the accommodation of the latter-
exceeds that of many an African king, the abfolute mafter of thsj
Hye? and liberties of ten thoufand naked favages.

THE NATURE AND CAUSES OF

CHAP. II.

Of the Principle which gives Occajion to the Divijion of Labour.

BOOK f I ' HIS divifion of labour, from which fo many advantages are
JL derived, is not originally the effe6l of any human wifdom,
which forefees and intends that general opulence to which it gives
occafion. It is the neceffary, though very flow and gradual con-
ifequence of a certain propenfity in human nature which has in
view no fuch extenfive utility j the propenfity to truck, barter,
and exchange one thing for another.

Whether this propenfity be one of thofe original principles
in human nature, of which no further account can be given i or
whether, as feems more probable, it be the necelTary confequence
of the faculties of reafon and fpeech, it belongs not to our prefent
fubje6l to enquire. It is common to all men, and to be found in
no oth^ race of animals, which feem to know neither this nor any
other fpecies of contrails. Two greyhounds in running down the
4ame hare, have fometimes the appearance of afting in fome fort
of concert. Each turns her towards his companion, or endeavours
Xo intercept her when his companion turns her towards himfelf.
This, however, is not the efFed of any contract, but of the acci-
<Iental concurrence of their paflions in the fame obje6l at that
particular time. Nobody ever faw a dog make a fair and deliberate
exchange of one bone for another with another dog. Nobody
-ever faw one animal by its geftures and natural cries fignify to
another,' this is mine, that yours ; I am willing to give this for
that. When an animal wants to obtain fomething either of a
man or of another animal, it has no other means of perfuafiou
but to gain the favour of thofe whofe fervice it l equires. A puppy
fawns upon its dam, and a fpaniel endeavours by a thoufand

attradions

THE WEALTH OF NATIONS

uttradions to engage the attention of its mafter who is at dinner, C
when it wants to be fed by him. Man fometimes ufes the fame
arts with his brethren, and when he has no other means of en*
gaging them to a61: according to his inclinations, endeavours by
every fervile and fawning attention to obtain their good will. He
has not time, however, to do this upon every occafion. In civi-
lized fociety he ftands at all times in need of the co-operation and
afliftance of great multitudes, while his whole life is fcarce fuf-
iicient to gain the friendfhip of a few perfons. In almoii every
other race of animals each individual, when it is grown up to
maturity, is intirely independant, and in its natural ftate has oc-
cafion for the affiftance of no other living creature. But man has
almoft conftant occafion for the help of his brethren, and it is in
vain for him to expe6t it from their benevolence only. He will be
more likely to prevail, if he can intereft their felf-love in his favour,
and fhew them that it is for their own advantage to do for hinx
what he requires of them. Whoever offers to another a bargain
of any kind, propofes to do this. Give me that which I want*
and you fhall have this which you want, is the meaning of every
fuch offer ; and it is in this manner that we obtain from one an-
other the far greater part of thofe good offices which we fland
in need of. It is not from the benevolence of the butcher, the
brewer, or the baker, that we expe6l our dinner, but from their
regard to their own intereft. We addrefs ourfelves not to their
humanity but to their felf-love, and never talk to them of our
own neceffities but of their advantages. Nobody but a beggar

:chufes to depend chiefly upon the benevolence of his fellow citi-
zens^ Even a beggar does not depend upon it entirely. The
charity of well difpofed people, indeed, fupplies him with the

^hole fund of his fubfiftence. But though this principle ultimately
provides him with aU the neceffaries of life which he has occafion
for, it neither does nor can provide him with th^m as he has
YoL. L D occafion

THE NATURE A-ND CAU/6ES OF

B O^O K cxxafion for them. The greater part of his occafipnal wants ;ai*c
— J fupplied in the fame manner as thofe of other people, by treaty^
by barter, and by purchafe. With the money which one man
gives him he purchafes food. The old cloatlis which another
beftows upon him he exchanges for other old cloaths which fuit
him better, or for lodging, or for food, or for money, with which,
he can buy either food, cloaths, or lodging, as he has occafion.

'J^s%isf fey 'treaty, by baiter^ arid' by purchafe, that we obtain
from onfe another the greater part of thofe mutual good offices
which we ftand in need of, fo'it is this fartic - trucking difpofitioa
which originally gives occafion to the divilioa of labour. In a
tebe of hunters or fhepherds a particular perfon makes bows and
arrows, for example, with more readinefs and dexterity than any
'other. He frequently exchanges them for' cattle or for venifon
with his companions > and he? finds at lafl that he can in this man-
'neri get more cattle and Venifon, than if he himfelf went to the
field to catch them. From a regard to'his own inteiefl, therefore,
<thc making of bows and arrows . grows to be his chief bufmefs,
arid lie becomes a fort of armourer. Another excels in making
'the frames and covers of their little huts or moveable houfes. He
■is accufVomed to be of ufe in this way^ to his neighbours, who-
' reward him in the fame manner with cattle and with venifon, till

■ at iafl he finds it his interefl to dedicate himfelf intirely to this
employtnent, and to become a fort of houfe- carpenter. In the

■ feme- manner a third becomes a fmith or a brazier, a fourth a tan-
ner or dreifer of hides or lkins,!ithe prmcipalpart of the eloathing,
of favages. And thus the certainty of being able to exchange all

.'that furplus part of the produce of his -oWn labour, which is over
'•and^above his own eonfumption, for fuch parts of the produce of
nofher meiw labour as he may have occafion for, encourages every
?idan lc^ apply himfelf to a particular occupation^ and to cultivate
noil£5'jo K[ .'

THE WEALTH OF NATIONS.

and bring to perfe6lion whatevei' talent or genius he may polFeft C HAP;
for that particular fpecies of bufinefs. fe^^^o'

The difference of natural talents in different men is, in reality,
much lefs than we are aware of ; and the very different genius
which appeal's to diftinguifh men of diffen^nt profefTions, when
grown Up to maturity, is not upon many occafions fo much the
caufe, as the effe6t of the divifion of labour. The difference
between the moft diffimilar chara'fters, between a pliilofopher and
a common ftreet porter, for example, feem-s to arife not fo much
from nature, as from habit, cuftom, and education.-' WherPthey
came into the world, and for - the fir ft fix or eight years of theif
exiftence, they were perhaps very m6ch alike, and neither th'eif
parents noi'^ play-fellows could perceive any remarkable difference*
^Aboiit that ^ age ■ 6t- foon ^ffer, they ' '<is>riie^ to be employed in. ^Wi'f
diiTerent occupations. The difference of talents : cbmeg >then to
be taken notice of, and widens by degrees, ItilFat laft the viahity
of the philofopher is willing to acknowledge fcarce any refem*
blance. But without the difpofition to trucks barter, and ex.*
change, every m^.n muft have procured to himfelf evecy neceffary
and conveniency of Ufe which he wanted. All muft have had the
fame duties to perform, and the fame work to do, and there could
have been no fuch difference of employment as could alone give
occafion to any great difference of talents. >-

As it is this difpofition which forms that dlfferend^^ (Sf 'talents,
fo remarkable among men of different profefTions, To' it is this
fame difpofition which renders that difference ufeful. Many tribes
of animals acknowledged to be all of the fame fpecies, derive from
nature a much more remarkable diftin6lion of genius, than what,
antecedent to cuftom and education, appears to take place among
men. By nature a philofopher is not in genius and difpofition

D 2 half

20'

TH£ NATURE AND CAUSES OT

R O^O K half fo different from a ftreet porter, as a maftifF is from a grey-.

V--v~' hound, or a greyhound from a ^aniel, or this laft from a fhep-
herd's dog. Thofe different tribes of animals, however, tho' all
of the fame fpecies, are of fcarce any ufe to one another. The
ftrength of the mailiff is not, m the leaft,. fupported either by
the fwiftnefs of the greyhound, or by the fagacity of the fpaniel,
or by the docility of the fliepherd's dog. The effedls of thofe
different geniufes and talents, for want of the power or difpofition
to barter and exchange, cannot be brought into a common flock,
and do not in the leafl contribute ta the better accommodation and
conveniency of the fpecies. Each animal is flill obliged to fupport
and defend itfelf, feparately and independantly, and derive^
no. fort of advantage from that variety of talents with which
nature has diftinguifhed its fellows. Among men, on the con^
trary, the mofl diflimilar geniufes are of ufe to one another,;, the
different produces of their refpe^live talents, by the general dif-
pofition to truck,^ barter, and- exchange, being brought, as it
were, into a common flock, where every man may purchafg
whatever part of the produce of other men's, talents: he has. oc-
cafion fon. fljjuoiia a^nii ^iboi hi onib 10 m

jiman aril " ^'>r.

THE WEALTH. OF NATIONSii

: ffrtelt ^irfl Tol J'jinF<f^ "J? rfioi^ omrod u.^».-^i->

fyjj/ ^-5^ Dhifion of Ldhour is limited by the Exteni of the Market^-

AS; it is the power of exchanging that gives occafion to the C HA P.
divifion of labouiv fo the extent of this divifion muft always v--v~^
be hmited by the extent of that power, or, in other words, by
the extent of the market. When the market is very fmall, no
perfon can have any encouragement to dedicate himfelf entirely to
one employment, for want of the power to exchange all that furplus
part of the produce of his own labour, which is over and above
his own confumption, for fuch parts of the produce of other mens>
labour as he has occafion for., ewoilai yJi b'?fri)fr«^fiiftib ebH tMii&r
.^il-r isrfJonB -sna ot lo zsioins:^ lii! flom ^At ^ygps-rt

Thers are fomc forts of induftry, even of the loweft kindi
which can be carried on no where but in a great town. 'A porter.^
for example, can find employment and fubfiftence in no other
plateei- A village is by much too' narrow a fphere for him ;- even
an ordinary market town is fcarce large enough to afford him
conftant occupation. In the lone houfes and very fmall vil-
lages which are fcattered about in fo defart a country as the
highlands of Scotland^ every farmer muft be butcher, baker and
brewer for his own family. In fuch fituations we can fcarce
expe6t to find even a fmith, a carpenter, or a mafon, within lefs
than twenty miles of another of the fame trade. The fcattered>
families that live at eight or ten miles diftance from the neareft of
them, muft learn to perform themfelves a great number of little
pieces of work, for which, in more populous countries,, they
would call in the affiftance of thofe workmen. Country workmen
are almoft every where obliged to apply themfelves to all the differ-
ent branches of induftry that have fo much affinity to one another
.0' ^ as^

THE NATURE AND CAUSES OF

B O^O K as to be employed about the fame fort of materials. A country
carpenter deals in every fort of work that is made of wood : a
country fmith in every fort of • work that is made of iron. The
former is not only a carpenter, but a joiner, a cabinet-maker, and
even a carver in wood, as well as a wheel-wright, a plough-
wright, a cart and waggon maker. The employments of the latter
' are ftill mere various. It is impoffible there fhould be fuch a
trade as even that of a nailer in the remote and inland parts of
the highlands of Scotland. Si^ch a workman at the rate of a
tlioufand nails a day, and three hundred working days in the year,
will make three hundred thoufand nails in the year. But in fuch
a fituation it would be impoflible to difpofe of one thoufand, that
is, of one day's work in the year.

As by means of water-carriage a more extenfive market is
opened to every fort of induftry than what land-carriage alone can
afford it, fo it is upon the fea coaft, and along the banks of navi-
gable rivers, that induftry of every kind naturally begins to fub-
dividc and improve itfelf ; and It is frequently not till a long time
after that thofe improvements extend themfelves to the inland parts
of the country. A broad-wheeled waggon, attended by two men
and drawn by eight horfes, in about fix weeks time carries and
brings back between London and Edinburgh near four ton weight
of goods. In about the fame time a fliip navigated by fix or eight
men, and failing between the ports of London and Leith, fre-
quently carries' and brings back two hundred ton weight of goods.
Six or eight men, therefore, by tlie help of water-carriage, can
carry and bring back in the fame time the fame quantity ©f goods
between London and Edinburgh as fifty broad-wheeled waggons,
' attended by a hundred men, and drawn by four hundred horfes.
Upon two hundred tons of goods, therefore, carried by the cheape'ft
land-carriage froiii London to Edinburgh, there muft be charged

^THE WEALTH OF NATIONS.

the maintenance of, a hundred men for three weeks, and both the C
maintenance, and, what is nearly equal to the maintenance, the u.
wear and tear of four hundred horfes as well as of fifty great
waggons. Whereas upon the fame quantity of goods carried by
water, there is to be charged only the maintenance of fix or eight
men, and the wear and tear of a fhip of two hundred tons burden,
together with the value of the fuperior rifk or the difference of the
infurance between land and water-carriage. Were there no other
communication between thofe two places, therefore, but by land*
carriage, as no goods could be tranfported from the one to the
other except fuch whofe priqe was very confiderable in proportion
to their weight, they could carry on but a fmall part of that
commerce which is at prefent carried on between them, and con-
fequently could give but a fmall part of that encouragement which
they at prefent mutually afford to each other's induilry. There
could be little or ,no commerce of any kind between the diftant
parts of .the world. What gopds could bear the expence of lanA-
earriage between London and Calcutta ? Or if there was any fo
precious as to be able to fupport this expence, with ,what fafety
coald they be tranfported through the territories of fo many
(barbarous nations ? Thofe two citiesi however, at prefent carry
on together a very confiderable commerce, and, by mutually
affording a market, give a good deal of encom-agement , to each
other's induftry.

Since fuch, therefore, are the advantages of water carriage,
it is natural that the firft improvements of art and induftry fhould
be made where this conveniency opens the whole world for a
market to the produce of every fart of labour, and that they
fhould always be much later in extending themfelves into the in-
land parts of the countiy. The inland parts of the country can
for a long time have no other market for the greater part of their

S goods.

THE NATURE AND CAUSES OF

B O^O K goods, but the country which lies round about them, and fepa-
w-v-^ rates them from the fea coaft, and the great navigable rivers. The
€Xtent of their market, therefore, muft for a long time be in
proportion to the riches and populomfncfs of that country, and
confequently their improvement muft always be pofterior to the
improvement of that country. In our North American colonies
the plantations have conftantly followed either the fea coaft or
the banks of the navigable rivers, and have fcarce any where ex-
tended themfelves to any confiderable diftance from both.

The nations that, according to the beft authenticated hiftor)',
appear to have been firft civilized, were thofe that dwelt round
the coaft of the Mediterranean fea. That fea, by far the greateft
inlet that is known in the world, having no tides, nor confequently
any waves except fuch as are caufed by the wind only, was, by
the fmoothnefs of its furface, as well as by the multitude of its
iflands, and the proximity of its neighbouring fhores, extreamly
favourable to the infant navigation of the world ; when from their
ignorance of the compafs, men were afraid to quit the view of
the coaft, and from the imperfe61:ion of the art of ftiip-building,
to abandon themfelves to the boifterous waves of the ocean. To
pafs beyond the pillars of Hercules, that is, to fail out of the
freights of Gibraltar, was, in the antient world, long confidered
as a moft wonderful and dangerous exploit of navigation. It was
late before even the Phenicians and Carthaginians, the moft
fkilful navigators and ftiip-builders of thofe old times, attempted
it, and they were for a long time the only nations that did at-
tempt it.

Of all the countries on the coaft of the Mediterranean fea,
Egypt feems to have been the firft in which either agriculture or
manufa6lures were cultivated and improved to any confiderable

degree.

THE WEALTH OF NATIONS.

degree. Upper Egypt extends itfelf no where above a few miles C
from the Nile, -and in Lower Egypt that great river breaks itfelf
into many different canals, which, with the affiftance of a little
art, feem to have afforded a communication by water carriage,
not only between all the great towns, but between all the con-
fiderable villages, and even to many farm houfes in the country ;
nearly in the fame manner as the Rhine and the Maefe do in
Holland at prefent. The extent and eafmefs of this inland
navigation was probably one of the principal caufes of the early
improvement of Egypt,

The improvements in agriculture and manufadlures feem like-
wife to have been of very great antiquity in the provinces of Bengal
in die Eaft Indies, and in fome of the eaftern provinces of China 5
though tlie great extent of this antiquity is not authenticated by any
hiftories of wliofe authority we, in this part of the world, are well
affured. In Bengal the Ganges and feveral other great rivers break
themfelves into many canals in the fame manner as the Nile does
in Egypt. In the eaftern provinces of China too feveral great
rivers form, by their different branches, a multitude of canals,
and by communicating with one another afford an inland naviga-
tion much more extenfive than that either of the Nile or the
Ganges, or perhaps than both of them put together. It is re-
markable that neither the antient Egyptians, nor the Indians, nor
the Chinefe, encouraged foreign commerce, but feem all to have
derived their great opulence from this inland navigation.

All the inland parts of Africa, and all that part of Afia v/hich
lies any confiderable way north of the Euxine and Cafpian feas,
the ancient Scythia, the modern Tartary and Siberia, feem in
all ages of the world to have been in the fame barbarous and
uncivilized ftate in which we find them at prefent. The fea of

Vol. I. E Tartary

THE l^ATURE AND CAUSES OF

Tartary is the frozen ocean which admits of no navigation, and
though fome of the greateft rivers in the world run through that
country, they arc at too great a diftance from one another to
carry commerce and communication through the greater part of
it. There are in Africa none of thofe great inlets fuch as the
Baltic and Adriatic feas in Europe, the Mediterranean and Eux-
ine feas in both Europe and Afia, and the gulphs of Arabia,
Perfia, India, Bengal and Siam, in Afia, to carry maritime com-
merce into the interior parts of that great continent : and the
great rivers of Africa are at too great a diftance from one another
to give occafion to any confiderable inland navigation. The com-
merce befides which any nation can carry on by means of a river
which does not break itfelf into any great number of branches
or canals, and which runs into another territory before it reaches
the fea, can never be very confiderable ; becaufe it is always in the
power of the nations who poffefs that other territory to obftru6l the
communication between the upper country and the fea. The navi-
gation of the Danube is of very little ufe to the different ftates of
Bavaria, Auftria and Hungary, in comparifon of what it would
be if any one of them poffelled the whole of its courfe till it falls
into the Black fea.

THE WEALTH OF NATIONS. «7

CHAP. IV.

Of the Origin and Ufe of Money.

WHEN the divifion of labour has been once thoroughly CHAP.
eftablifhed, it is but a very fmall part of a man's wants
which the produce of his own labour can fupply. He fupplies the
far greater part of them by exchanging that furplus part of the
produce of his own labour, which is over and above his own con-
fumption, for fuch parts of the produce of other men's labour as
he has occafion for. Every man thus lives by exchanging, or
becomes in fome meafure a merchant, and the fociety itfelf grows
to be what is properly a commercial fociety.

But when the divifion of labour firft began to take place, this
power of exchanging muft frequently have been very much
clogged and embarrafTed in its operations. One man, we fliall
fuppofe, has more of a certain commodity than he himfelf has
occafion for, while another has lefs. The former confequently
would be glad to difpofe of, and the latter to purchafe, a part of
this ftiperfluity. But if this latter fhould chance to have nothing
that the former ftands in need of, no exchange can be made
between them. The butcher has more meat in his (hop than he
himfelf can con fume, and the brewer and the baker would each of
. them be willing to purchafe a part of it. But they have nothing to
offer in exchange, except the different produ6lions of their refpec-
tive trades, and the butcher is already provided with all the bread
and beer which he has immediate occafion for. No exchange can,
in this cafe, be made between them. He cannot be their merchant,
nor they his cuflomers and they are all of them thus mutually lefs
ferviceable to one another. In order to avoid the inconveniency

E 2 of

Tilt I^aVure and causes of

B O^O K of fuch fituations, every prudent man in every period of fociety, after
u^v-*«^ the firft eftablifliment of the divifion of labour, muft naturally
have endeavoured to manage his affairs in fuch a manner, as to
have at all times by him, befides the peculiar produce of his own.
induftry, a certain quantity of fome one commodity or other, fuch
as he imagined few people would be likely to refufe in exchange
for the produce of their induftry.

Many different commodities, it is probable, were fucceflively
■both thought of and employed for this purpofe. In the rude
»ages of fociety, cattle are faid to have been the common inftru-
ment of commerce; and, though they muft have been a moft in-
convenient one, yet in old times we find things were frequently
valued according to the number of cattle which had been given
in exchange for them. The armour of Diomed, fays Homer,
<:oft only nine oxen; but that of Glaucus coft a hundred oxen.
Salt is faid to be the common inftrument of commerce and ex-
changes in Abyflinia ; a fpecies of fhells in fome parts of the
coaft of India; dried cod at Newfoundland; tobacco in Vir-
. -ginia ; fugar in fome of our Weft India colonies ; hides or
drefled leather in fome other countries ; and there is at this day a
village in Scotland where it is not uncommon, I am told, for a
"workman to carry nails inftead of money to the baker's fhop or
the alehoufe.

In all countries, however, men feem at laft to have been deter-
"mined by irrefiftable reafons to give the preference, for this em-
'ployment, to metals above every other commodity. Metals
can not only be kept with as little lofs as any other commodity,
'fcarce any thing being lefs periftiable than they are, but they
can likewife, without any lofs, be divided into any number of
'parts, as by fufion thofe parts can eafily be reunited again; a

quality

THE WEALTH OF NATIONS.

quality which no other equally durable commodities poiTefs, and ^ P.
which more than any other quality renders them fit to be the u- v-*-^
inftmments of commerce and circulation. The man who wanted
to buy fait, for example, and had nothing but cattle to give in
exchange for it, muft have been obliged to buy fait to the value of
a whole ox, or a whole ftieep at a time. He could feldom buy lefs
than this, becaufe what he was to give for it could feldom be
divided without lofs j and if he had a mind to buy more, he mufl,
for the fame reafons, have been obliged to buy double or triple
the quantity, the value, to wit, of two or three oxen, or of
two or three ftieep. If, on the contrary, inftead of flieep or
oxen, he had metals to give in exchange for it, he could eafily
proportion the quantity of the metal to the precife quantity of
the commodity which he had immediate occafion for.

Different metals have been made ufe of by different nations
for this purpofe. Iron was the common inflrument of com-
merce among the antient Spartans ^ copper among the antient
Romans; and gold and filver among all rich and commercial
nations.

Those metals feem originally to have been made ufe of for this
purpofe in rude bars without any flamp or coinage. Thus we
are told by Phny, upon the authority of one Remeus an antient
author, that, till the time of Servius Tuhius, the Romans had
no coined money, but made ufe of unflamped bars of copper to
purchafe whatever they had occafion for. Thefe rude bars, there-
fore, performed at this time the function of money.

The ufe of metals in this rude flate was attended with two
very confiderable inconveniencies ; firfl, with the trouble of
weighing them 5 and, fecondly, with the trouble of affaying them.

THE NATURE AND CAUSES OF

In the precious metals, where a fmall difference in the quantity
makes a great difference in the value, even the bufinefs of weigh-
ing, with proper exa6tnefs, requires at leafl very accurate weights
«nd fcales. The weighing of gold in particular is an operation
of fome nicety. In the coarfer metals, indeed, where a fmall error
would be of little confequence, lefs accuracy would, no doubt,
be neceffary. Yet we fhould find it excefTively troublefome if every
time a poor man had occafion either to buy or fell a farthing's
worth of goods, he was obliged to weigh the farthing. The ope-
ration of aiTaying is ftill more difficult, ftill more tedious, and*
xmlefs a part of the metal is fairly melted in the crucible, with
proper diffolvents, any conclufion that can be drawn from it, is
extreamly uncertain. Before the inftitution of coined money,
however, unlefs they went through this tedious and dirficult ope-
ration, people muft always have been liable to the groffeft frauds
and impofitions, and inflead of a pound weight of pure filver,
or pure copper, might receive, in exchange for their goods, an
adulterated compofition of the coarfcft and cheapefl materials,
which had, however, in their outward appearance, been made to
refemble thofe metals. To prevent fuch abufes, to facilitate ex-
changes, and thereby to encourage all forts of induflry and com-
merce, it has been found neceffary, in all countries that have
made any confiderable advances towards improvement, to affix
a publick flamp upon certain quantities of fuch particular metals,
as were in thofe countries commonly made ufe of to purchafe
goods. Hence the origin of coined money, and of thofe publick
offices called mints ; inflitutions exa6lly of the fame nature
with thofe of the aulnagers and flampmaflers of woollen and
linen cloth. All of them are equally meant to afcertain, by means
of a publick flamp, the quantity and uniform goodnefs of thofe
different commodities when brought to market.

The

THE WEALTH OF NATIONS. 3:

The firft publick ftamps of this kind that were affixed to the ^
current metals, feem in many cafes to have been intended to Vi--y— — ^
afcertain, what it was both moft difficult and moft important to
afcertain, the goodnefs or finenefs of the metal,, and to have
refembled the fterling mark which is at prefent affixed to plate
and bars of filver, or the Spanifh mark which is fometimes affixed
to ingots of gold, and which being ftruck only upon one fide of
the piece, and not covering the whole furface, afcertains the fine-
nefs, but not the weight of the metal. Abraham weighs to
Ephron the four hundred fhekels of filver which he had agreed
to pay for the field of Machpelah. They are faid however to
be the current money of the merchant, and yet are received by
weight and not by tale, in the fame manner as ingots of gold and
bars of filver are at prefent. The revenues of the antient Saxon
kings of England are faid to have been paid, not in money but
in kind, that is, in victuals and provifions of all forts. William
the conqueror introduced the cuftom of paying them in money.
This money, however, was, for a long time, received at the ex»
chequer, by weight and not by tale.

The inconveniency and difficulty of weighing thofe metals with
cxa6lnefs gave occafion to the infi:itution of coins, of which the
ftamp, covering entirely both fdes of the piece and fometimes
the edges too, was fuppofed to afcertain not only the finenefs, but
the weight of the metal. Such coins, therefore, were received
by tale as at prefent, without the trouble of weighing.

The denominations of thofe coins feem originally to have
cxpreffed the weight or quantity of metal" contained in them. In
tiie time of Servius Tullius, who firft coined money at Rome,
the Roman As or pondo contained a Roman pound of good
copper. It was divided in the fame manner as our Troyes.

pound.

THE NATURE AND CAUSES OF

K pound, into twelve ounces, each of which contained a real ounce'
of good copper. The Englifli piound fterling, in the time of
Edward I. contained a pound, Tower weight, of filverof a known
finenefs. The Tower pound feems to have been fomething more
than the Roman pound, and fomething lefs than the Troyes
pound. This laft was not introduced into the mint of Eng-
land till the 1 8th of Kenry VIII. The French livre contained
in the time of Charlemagne a pound, Troyes weight, of filver
of a known finenefs. The fair of Troyes in Champaign was
at that time frequented by all the nations of Europe, and the
weights and meafures of fo famous a market were generally known
and efteemed. The Scots money pound contained, from the
time of Alexander the firft to that of Robert Bruce, a pound of
filver of the fame weight and finenefs with the Engliih pound
fterling. Englifli, French and Scots pennies too, contained all
df them originally a real pennyweight of filver, the twentieth
part of an ounce, and the two hundred and fortieth part
of a pound. The fiiilling too feems originally to have been the
denomination of a weight. When wheat is at twelve Jhillings the
quarter t fays an antient ftatute of Henry III. the?! wajlel bread
of a farthing JJjall weigh eleven jliiUings and four pence. The pro-
portion, however, between the fiiilling and either the penny on
the one hand, or the pound on the other, feems not to have been
fo confl:ant and uniform as that between the penny and the pound.
During the firft race of the kings of France, the French fou
or fhilling appears upon different occafions to have contained
five, twelve, twenty, forty, and forty-eight pennies. Among the
antient Saxons a fiiilling appears at one time to have contained
only five pennies, and it is not improbable that it may have been
as variable among them as among their neighbours, the antient
Franks. From the time of Charlemagne among the French, and
from that of William the conqueror among the Englifii, the
proportion between the pound, the fiiilling, and the penny, feems

THE WEALTH OF NATIONS.

to have been uniformly the fame as at prefent, though the vakie C
of each has been very different. For in every country of the u
world, I beUeve, the avarice and injuftice of princes and fovereign
flates, abufing the confidence of their fubje6ts, have by degrees
diminiftied the real quantity of metal which had been originally
contained in their coins. The Roman As, in the latter ages of
the Republick, was reduced to the twenty fourth part of its
original value, and, inftead of weighing a pound, came to weigh
only half an ounce. The Englifli pound and penny contain
at prefent about a third only ; the Scots pound and penny
about a thirty- fixth ; and the French pound and penny about a
fixty-lixth part of their original value. By means of thofe ope-
rations the princes and fovereign ftates which performed them
were enabled, in appearance, to pay their debts and to fulfil their
engagements with a fmaller quantity of filver than would otherwife
have been requifite. It was indeed in appearance only ; for their
creditors were really defrauded of a part of what was due to them.
All other debtors in the ftate were allowed the fame privilege, and
might pay with the fame nominal fum of the new and debafed coin
whatever they had borrowed in the old. Such operations, there-
fore, have always proved favourable to the debtor, and ruinous
to the creditor, and have fometimes produced a greater and more
univerfal revolution in the fortunes of private perfons, than could
have been occafioned by a very great publick calamity.

It is in this manner that money has become in all civilized
nations the univerfal inftrument of commerce, by the intervention
of which goods of all kinds are bought and fold, or exchanged
for one another.

What are the rules which men naturally obferve in exchanging
them either for money or for one another, I fhall now proceed
Vol. I. F to

THE NATURE AND CAUSES OF

B.O^O K to examine. Thefe rules determine what may be called the relativs:-
u»../-— JL or exchangeable value of goods* atisq

The word value,, it is to be obferved,. has two different mean-
ings, and fometimes.exprefles the utility of fome particular obje6l,*
and fometimes the power of purchafmg other goods which the pof-
feflion of that obje6i: conveys. The one may be called, " value in;
*' ufe;" the other, " value in exchange." The things which'i
' have the greateft value in ufe have frequently little or no value
in exchange; and, on the contrary, thofe which have the greateft'
value in exchange have frequently Rttle or no value in ufe"..
Nothing is^ more ufeful than water: but it will purchafe fcarce
any thing j fcarce any thing can be had in exchange for it". A
diamond, on the contrary, has fcarce any value in ufe; but a;
very great quantity of other goods may frequently be had in ex- -
change for it;

In order to inveftigate the principles which regulate the exchange--
able value of commodities, I fhall endeavour to.fhew, ,

First, what is the real meafiire of this exchangeable valuci,
©r, wherein confifts the real price of all commodities.-

Secondi^y, what are the different parts of which- this real-p^'icer
16 compofed or made up.

And, laftly, what are the different circumftances which fome-
times raife fome or all of thefe different parts of price above, an4-
fometimes fink them below their natural or ordinary rate; or,_
what are the caufes which fometimes hinder the market price,-
that is, the a6lual price, of commodities, from coinciding ex--
a6tly with what may be called their natural price. . "

I SHALL endeavour to explain, as fully and diftinftly as I <;an, .
thofe three fubje£ts in the three following chapters, for which I.

muft

r£f A L f n of WWl (>#^: i5

-reader: his patience in order to examiH^ a detail Vhich n^^
haps in 'fome places appear unneceflarily tedious -aricl ^13 attendon
iij. or^er tf> underftand what may, perhaps, aftei" *^e fullefl: expli-
-^tl^on' wmch I am capable of giving of it, appear itill in |bme
'degi^ee obfcure. I am always willing to run fome hazard of i3eing
<tedious in order to be fure that I am perfpicuous ; and after taking
the utmoft pains that I can to be perlpicuous, fome obfcurity may
'ftill appear to remain upon a /ub}e6t wliich is in its own nature
^extremely abftradted.

^ CHAP. Y.

^Gf the real and nominal Price of Commodities, $r cf their Pric4
in Labour, and their Price in Money.

EVERY man is rich or poor according to the degree in whicfi
he can afford to enjoy the neceffaries, conveniencies, and
amufements of human life. But after the divilion of labour has
once thoroughly taken place, it is but a very frnall part of
thefe with which a man's own labour can fupply him. The far
.greater part of them he muft derive from the labour of other
people, and he muft be rich or poor according to the quantity of
that labour which he can command, or which he can afford to
purchafc. The value of any conimodity, therefore, to the perfon.
who poffeiTcs it and who means not to ufe or confume it himfelf^
but to exchange it for other commodities, is equal to the quantity
of labour which it enables him to purchafe or commafid. Labour,
therefore, is the real meafure of the exchangeable vaiu6 of all
commodities.

Fa The

THE NATURE AND CAUSES OF

The real price of every thing, what every thing really cofts to
the man who wants to acquire it, is the toil and trouble of ac-
quiring it. What every thing is really worth to the man who
has acquired it, and who wants to difpofe of it or exchange it for
femething elfe, is the toil and trouble which it can fave to him-
felf, and which it can impofe upon other people. What is bought
with money or with goods is purchafed by labour as much as
what we acquire by the toil of our own body. That money or
thofe goods indeed fave us this toil. They contain the value of
a certain quantity of labour which we exchange for what is
fuppofed at the time to contain the value of an equal quantity.
Labour was the firft price, the original purchafe money that was.
paid for all things. It was not by gold or by filver, but by
labour, that all the wealth of the world was originally purchafed ;
and its value, to thofe who poflefs it and who want to exchange
it for fome new produ6lions, is precifely equal to the quantity of
labour which it can enable them to purchafe or command.

^ though labour be the real meafure of the exchangeabter

^^ifue of all commodities, it is not that by which their value is
'^iommonly eftimated. It is often difficult to afcertain the pro-
portion between two different quantities of labour. The time fpent
in two different forts of work will not always alone determine this>
proportion. The different degrees of hardfhip endured, and oC
ingenuity exercifed muft likewife be taken into account.. There
may be more labour in aa hour's hard work than in two hours,
eafy bufmefs ; or in an hour's application to a trade which it coft
ten years labour to, learn, than in a month's induftry at an ordinary
and obvious employment. But it is not eafy to find any accurate
meafure either of hardfliip or ingenuity. In exchanging indeed the
different produ6tions of different forts of labour for one another,
fome allowance is commonly made for both. It is adjufted,. how-
ever;.

^THE WEALTH OF NATIONS.

;ever,mof by any accurate meafure, but by the higgling and
bargaining of the market, according to that fort of rough equality

' which, though not exa6t, is fufficient for carrying on the bufinefs

A of common life.

ffliix OJ

♦rf- Every commodity befides, is more frequently exchanged for,
and thereby compared with, other commodities than with labour.
It is more natural, therefore, to eftimate its exchangeable value by
the quantity of fome other commodity than by that of the labour

, whicli it can purchafe. The greater part of people too underftand
;better what is meant by a quantity of a particular commodity, than

. . by a quantity of labour.' The one is a plain palpable obje6l j the
other an abftra6l notion, which,, though it can be made fufiicientiy
intelligible,, is not altogether fo natural and obvious.

But when barter ceafes, and money has^ become the common
Miftrument of commerce, every particular commodity is more
frequently exchanged for money than for any other commodity.
The butcher feldom carries his beef or his mutton to the baker, or
tlie brewer, in order to exchange them for bread or for beer;
but he carries them to the market, whei-e he exchanges them for,
money, and afterwards exchanges that money for bread and for
beer. The quantity of money which he gets for them regulates >
too the quantity of bread and beer which he can afterwards pur-
chafe. It is more natural and obvious to him,, therefore,, to efti-
mate their value by the quantity of money, the commodity for
which he immediately exchanges them,, than by that of bread andi
beer, the commodities for which he can exchange them only by the
intervention of another commodity j and rather to fay that his
butcher's meat is worth threepence or fourpence a pound, than
that it is worth three or four pounds of bread, or three or four
quarts of fmall beer. Hence it. comes to pafs that the exchange-
S able.

THE NATUR-E AND CAUSES OF

B O^O K able value of every commodity is more frequently eftiniated by the
\^^^<'^ quantity of money, than by the quantity either of labour or of any
.other .commodity which can be had in exchange for it.

*GoLD and filver, however, 'like every other commodity, vary iti
their value, are fometimes cheaper and fometimes dearer, fometimes
of eafier and fometimes of more difficult .purchafe. The quantity
of labour which any particular quantity of tliem can purchafe or
command, or the quantity of other goods which it will exchange
rfor, depends always upon the fertility or barrennefs of the mines
which happen to be known about the time when fuch exchanges
-are mad^. The difcovery of the abundant mines of America
.reduced, in the fixteenth century, the value of gold and filver in
.Europe to about a third of what it had been before. As it coft
iefs labour to bring thofe metals from the mine to the market, fo
•when they were brought there they could purchafe or command
lefs labour; and this revolution in their value, though perhaps the
gi'eateft, is by no means the only one of which hiftory gives fome
account. But as a meafure of quantity, fuch as the natural foot,
fathom, or handful, which is continually varying in its own quan-
tity, can never be an accurate meafure of the quantity of other
things.; fo a commodity which is itfelf continually varying in its
own value, can never be an accurate meafure of the value of other
•commodities. Equal quantities of labour muft at all times and places
be of equal value to the labourer. He muft always lay down the
fame portion of his eafe, his liberty, and his happinefs. The price
which he pays muft always be the fame, whatever may be the quan-
tity of goods which he receives in return for it. Of thefe, indeed, it
may fometimes purchafe a greater and fometimes a fmaller quantity ;
but it is their value which varies, not that of the labour which pur-
chafes them. At all times and places that is dear which it is difficult
to come at, or which it cofts much labour to acquire ; and that cheap
g which

THE WEALTH OF NATIONS.

which is to be had eafily, or with very Httle labour. Labour alone C H^A P.

tiierefore, never varying in its own value, is alone the ultimate and ^ — v-— >
lieal ftandard by which the value of all commodities can at all times
and places beeftimated and compared. It is their real price; money
is their nominal price only.

But though equal quantities of labour are always of equal
value to the labourer, yet to the perfon who employs him they
appear fometimes to be of greater and fometimes of fmaller
v-alue. He. purchafes them fometimes with a. greater and fome-
times with a fmaller quantity of goods, and to him the. price of
labour feems to vary like that of all other things* It appears ta
him dear in the one cafe, and cheap in the other. In reality,
however, it is the goods which are. cheap in the one cafe, and
dear in the other.

In. this popular fenfe, therefore. Labour, like commodities,^
may be faid to have a real and a nominal price. Its real price may
be faid to conlift in the quantity of the necelTaries and conveniencies
of life which are given for itj its nominal price, , in the quantity
of money. The labourer is rich or poor, is well or ill rewarded,
in proportion to .the real, not to the nominal price of his laboucidt

>• nwc

The diftinftion between the real and the nominal price of com-*
modities and labour, is not a matter of mereipeculation, but may
fometimes be of confiderable ufe in praftice. The fame real price is
always of the fame value ; but on account af the variations in the
value of gold and filver, the fame nominal price is fometimes o£
very different values. When a landed eftate, therefore, is fold
with a refervation of a perpetual rent, , if it is intended that this
rent fhould always be of the fame value, it is of importance to the
family in whofe favour it is referved^ that it fhould not confift in

a particular.

THE NATURE AND CAUSES OF

^ a particular fum of money. Its value would in this cafe be liable
-» to variations of two xlifFerent kinds j firft, to thofe which arife from
the different quantities of gold and filver which are contained at
different times in coin of the fame denomination ; and, fecondly,
to thofe which arife from the different values of equal quantities
of gold and filver at different times.

Princes and fovereign ftates have frequently fancied that they
had a temporary interefl to diminifh the quantity of pure metal
contained in their coins j but they feldom have fancied that they
had any to augment it. The quantity of metal contained in the
coins, 1 believe, of all nations has, accordingly, been almofl con-
tinually diminifhing, and hardly ever augmenting. Such variations
therefore tend almoft always to diminifh the value of a money rent-

The difcovery of the mines of America diminiflied the value
of gold and filver in Europe. This diminution, it is commonly
fuppofed, though, I apprehend, without any certain proof, is ftill
going on gradually, and is likely to continue to do fo for a long*
time. Upon this fuppofition, therefore, fuch variations are more
likely to diminifh, than to augment the value of a money rent,
even though it fhould be ftipulated to be paid, not in fuch a
quantity of coined money of fuch a denomination, (in fo many
pounds fleiiing, for example) but in fo many ounces either of
pure filver, or of filver of a certain itandard.

The rents which have been referved in corn have preferved their
value much better than thofe which have been referved in money,
even where the denomination of the coin has not been altered.
By the i8th of Elizabeth it was enafted, That a third of the rent
of all college leafes fhould be referved in corn, to be paid, either
in kind, or according to the current prices at the nearefl publick

market.

THE' WEALTH OF NATIONS.

market. • Th^ money anfing from this corn; rent, though originally
but a third of the whole, is in the prefent times, according to
Do£lor Blackftone, commonly near double of what arifes from
the other two-thirds. The old money rents of colleges muft,,
according to this account, have funk almoft to a fourtli part of
their antient value ; or are worth httle more than a fourth part
of the corn which they were formerly worth. But fmce the reign
of Philip and Mary the denomination of the Englilh coin has
undergone little or no alteration, and the fame number of pounds,
fhillings and pence, have contained very nearly the fame quantity
of pure filver. This degradation, therefore, in the value of the
money rents of colleges, has arifen altogether from the degradation
in the value of filver.

When the degradation in the value of fdver is combined with
the diminution of the quantity of it contained in the coin of
the fame denomination, the lofs is frequently ftill greater. In
Scotland, where the denomination of the coin has undergone much
greater alterations than it ever did in England, and in France,^
where it has undergone ftill greater than it ever did in Scotland^
fome antient rents, originally of confiderable value, have in this
manner been reduced almoft to nothing.

Equal quantities of labour will at diftant times be purchafed
more nearly with equal quantities of corn, the fubfiftence of the
labourer, than with equal quantities of gold and filver, or perhaps
of any other commodity. Equal quantities of corn, therefore,
will, at diftant times, be more nearly of the fame real value, or
enable the poffelfor topurchafe or command more nearly the fame
quantity of the labour of other people. They will do this, I fay*
more nearly than equal quantities of almoft any other commodity ;
for even equal quantities of corn will not do it exactly. The fub-
fiftence of the labourer, or the real price of labour, as I fhall

Vol. I, G endeavour

THE NATURE AND CAUSES OF

B O^O K endeavour to fhow hereafter, is very different upon different occa-
u.-v-'-^ fionsi more liberal in a fociety advancing to opulence than in
one that is ftanding ftill ; and in one that is ftanding ftill than
in one that is going backwards. Every other commodity, how-
ever, will at any particular time purchafe a greater or fmaller
quantity of labour in proportion to the quantity of fubfiftence
which it can purchafe at that time. A rent therefore referved in
corn is liable only to the variations in the quantity of labour
which a certain quantity of corn can purchale. But a rent referved
in any other commodity is liable, not only to the variations in
the quantity of labour which any particular quantity of corn can
purchafe, but to the variations in the quantity of corn which can
be purchafed by any particular quantity of that commodity.

Though the real value of a corn rent, it is to be obferved
however, varies much lefs from century to century than that of a
money rent, it varies much more from year to year. The money
price of labour, as I fhall endeavour to ftiow hereafter,, does not
flu6tuate from year to year with the money price of corn, biit
feems to be every where accommodated, not to the temporary or
occaiional, but to the average or ordinary price of that necelTaiy of
life. The average or ordinary price of corn again is regulated, as I
lhall likewife endeavour to fhow hereafter, by the value of filver, by
the richnefs or barrennefs of the mines which fupply the market
with that metal, or by the quantity of labour which muft be em-
ployed, and confequently of corn which muft be confumed,^^ m
order to bring any particular quantity of it from the mine to the
market. But the value of filver, though it fometimes varies-
greatly from century to century, feldom varies much from year to
year, but frequently continues the fame or very nearly the fames?
for half a century or a century together. The ordinary or average-
money price of corn, therefore, may, during fo long a period,,

continue

THE WEALTH

NATIONS.

continue the fame or very nearly the fame too, and along with C
it the money price of labour, provided, at leaft, the fociety con-
tinues, in other refpefls, in the fame or nearly in the fame condition.
In the mean time the temporary ^nid OccafiOhal pricie of corn,
may frequently be double, one year, of what it had been the
year before, or flu6tuate from five and twenty to fifty fliillings
the quarter, for example. But when corn is at the latter price,
not only the nominal, but the real value of a corn rent will be
double of what if is when at the former, or will command double
the quantity either of labour or of the greater part of other
commodities j the money price of labour, and along with it that
of moft other things, continuing the fame during all thefe fluc-
tuations.

Laisour, therefore, it appears evidently, is the only univerfal,
9S well as the ortly accurate meafure of value, or the only ftandard
which we can compare the values of different commodities
at^'all times and at all places. We cannot eftimate, it is allowed,
tii^ ftsA- value of different commodities from century fo century
by the quantities of fitver which were given for them. We cannofe
eftimate it from year to year by the quantities of corn. By
the quantities of labour we can, with the greateft accuracy, efti-
mate it both from century to century and from year to year.
From century to century, corn is a better meafure than filver,
becaufe, from century to century, equal quantities of corn will
command the fame quantity of labour more nearly than equal
quantities of filver. From year to year, on the contrary, filver is
a better meafure than corn, becaufe equal quantities of it will
more nearly command the fame quantity of labour.

But though in eftabliftiing perpetual rents, or even in letting
very long leafes, it may be of ufe to diftinguifli between real and

G 2 nominal

^4 THE NATURE AND CAUSES OF

BOOK nominal price i it is of none in buying and felling, the liiorCs
^^^...^.^ common and ordinary tranfa6lions of human life, ulw il^th

At the fame time and place the real and the nominal price of
all commodities are exactly in proportion to one another. The
more or lefs money you get for any commodity, in the London
market, for example, the more or lefs labour it will at that time
and place enable you to purchafe or command. At the fame
time and place, therefore, money is the exa6l meafure of the
real exchangeable value of all commodities. It is fo, however, at
the fame time and place only.

Though at diflant places, there is no regular proportiojtti
between the real and the money price of commodities, yet the
merchant who carries goods from; the one to the other has nothmg .
to conftder but their money price, or the difference between the
quantity of filver for which he buys them, and that for which he
is -likely to fell them. Half an ounce of filver at Canton in China,
irfay command a greater quantity, both of labour and of the necef-
faries and conveniencies of life, than an ounce at London. A
commodity, therefore, which fells for half an ounce of filver at
Canton may there be really dearer,. o£ more real importance tO'
th'e^man who pofTefres it there, than one which fells for an ounce
atL.ondon to the man who pofTefTes it at London* If a London's
merchant, however, can buy at Canton for half an ounce of
filver, a <:ommodity which he can afterwards fell at London foR
an ounce, he gains a hundred per cent by the bargain juft as much',
as if an ounce of filver was at London exadlly of the fame value aa
at Canton. It isiof no importance : to him that half an ounce of
filver at Canton would have given him the command of more.-
labour and of a greater quantity of the neceflaries and conve-
niencies of life tlian an ounce can do at London., An ounce at

London.

THE WEALTH OF NATIONS.

Eondon will always give him the command of double the quantity C H^A P.
©f all- thefe which half an ounce could have done there, and this t*-y^-^
is precifely what he wants,

'flSs it is '^the nominal or money price of goods, therefore, which
finally determines the prudence or imprudence of all purchafes and*
fales, and thereby regulates almoft the whole bufinefs of common
life in which price is concerned, we cannot wonder that itfhoukf
have been fo much more attended to than the real price.

In fuch a work as this, however, it may fometimes be of ufe
to compare the different real values of a particular commodity at
different times and places, or the different degrees of power over
the labour of other people which it may, upon different occafions^
have given to thofe who poffeffed' it. We muft in this cafe com-
pare, not fo much' the different quantities of filver for which it
was commonly fold, as the different quantities of labour which
thofe different quantities of filver could have purchafed. But the
current, prices of labour, at diftant times and places can fcarce ever
be known with any degree, of exa6lnefs* Thofe of corn^ though
they have in few places been regularly recorded, are in general
better known and have been more frequently taken notice of by
hiftorians and other writers. We muft generally, therefore, con-
tent ourfelves with them, nof as being always exadlly in the fame
proportion as the current prices of labour, but as being the neareft
approximation which can commonly be had to that proportion.
I' fhall hereafter have occafion to make feveral comparifons of this,
kindi

In the progrefs of induftry, commerciaV nations have found it
convenient to coin' feveral different metals into money; gold for
larger payments, filver for purchafes of moderate value, and copper

or.

THE NATURE AND CAUSES OF

^ or fome other coarfe metah for thofe of ftill fmaller confiderat'ion.
They have always, however, confidered one of tliofe metals as
more peculiarly the meafure of value than any of the other two;
and this preference feems generally to have been given to the metal
which they happened firft to make ufe of as the inftrument of
commerce. Having once begun to ufe it as their ftandard, which they
muft have done when they had no other money, they have gene-
rally continued to do fo even when the neceffity was not the fame.

The Romans are faid to have had nothing but copper money
till witlvn five yeai-s before the firft Punic war, when they firft
began to coin filver. Copper, therefore, appears to have con-
tinued always the meafure of value in that republick. At Rome
all accounts appear to have been kept, and the value of all eftates
to have been computed either in AjJ^s or in Sejiertii. The As
ijsras always the denomination of a copper coin. The word Sef-
tertius fignifies two Ajjh and a half. Though the Sejiertius,
therefore, was always a filver coin, its value was eftimated in
popper.. At Rome, one who owed a great deal of money, was
^|aid; to have a great deal of other people's copper.

The northern nations who eftablifhed themfelves upon the ruins
of the Roman empii'e, feem to have had filver money from the firft
Ipe^inning of their fettlements, and not to have known either gold
or copper coins for feveral ages thereafter. There were filver coins
in England in the time of the Saxons j but there was Httle gold
coined, till tlie time of Edward III. nor any copper till that of
James I, of Great Britain. In England, therefore, and for the
fame reafon, I believe, in all other modern nations of Europe,
all accounts are kept and the value of all goods and of all eftates
is generally computed in filver: and when we mean to exprefs
the amount of a perfon's fortune, we feldom mention the number

5 of

THE WEALTH OF NATIONS.

of guineas, but the number of pounds which we fuppofe would C H^A P.
be given for it, <— -y^— j

In all countries, I believe, a legal tender of payment could
originally be made in the coin of that metal only which was pecu-
liai'ly confidered as the ftandard or meafure of value. In England
gold was not conlidered as a legal tender for a long time after it
was coined into money. The proportion between the values of
gold and filver money was not fixed by any publick law or pro-
clamation i but was left to be fettled by the market. If a debtor
offered payment in gold, the creditor might either rejedl fuch pay-
ment altogether, or accept of it at fuch a valuation of the gold
as he and his debtor could agree upon. Copper is not at prefent
a legal tender, except in the change of the fmaller filver coins.
In this ftate of things the diflinclion between the metal which was
the flandard, and that which was not the ftandard, was fomething
more than a nominal diftin6lion .

In procefs of time;, and as people became gradually more fartiiSap
with the ufe of the different metals in coin, and confequently better'
acquainted with the proportion between their refpe8:ive values,
it has, in moft countries I believe, been fottnd convenient to afeer- .
tain this proportion, and to declare by a publick law that a guinea^
for example, of fuch a weight and flneneft, fhouicf ebtchan'ge^f
one and twenty (hillings, or be a legal tender for a debt bf thai?
fum. In this ftate of things, and during the contfnuahce of any
one regulated proportion of this kind, the diftin<5fion between the
metal which is the ftandard and that which is not the ft^ndard»
becomes little more than a nominal diftin6lion.

In confequence of any change, however, in this regulated propor-
tion, this diftindion becomes, or at leaft feems to become, fomething^

more;

THE NATURE AND CAUSES OF

B O^O K more than nominal again. If the regulated value of a guinea,
V — for example, was either reduced to twenty, or raifed to two-
and twenty fhillings, all accounts being kept and almoft all obli-
gations for debt iDcing exprefled in filvcr money, the greater part
of payments could in either cafe be made with the fame quantity
of iilver money as before ; but would require very different quan-
tities of gold money ; a greater in the one cafe, and a fmaller in
the other. Silver would appear to be more invariable in its value
than gold. Silver would appear to meafure the value of gold, and
gold would not appear to meafure the value of fiiver. The value
of gold would feem to depend upon the quantity of filver which
it would exchange forj and the value of filver would not feem
to depend upon the quantity of gold which it would exchange
£br. This difference however would be altogether owing to the
cuftom of keeping accounts and of expreffing the amount of all
great and fmall fums rather in filver than in gold money. One
of Mr. Drummond's notes for five and twenty or fifty guineas
would, after an alteration of this kind, be ftill payable with five
and twenty or fifty guineas in the fame manner as before. It
would, after fuch an alteration, be payable with the fame quan-
tity of gold as before, but with very different quantities of filver.
In the payment of fuch sl note, gold would appear to be more
invariable in its value than filver. Gold would appear to mea-
fure the value of filver, and filver would not appear to meafure
the value of gold. If the cuftom of keeping accounts, and of
expreffmg promiffory notes and other obligations for money in
this manner, fhould ever become general, gold, and not filver,
would be confidered as the metal which was peculiarly the ftaiidard
or meafure of value.

In reality, during the continuance of any one regulated pro-
portion between the refpe^live values of the different metals in

coin.

THE WEALTH OF NATIONSe-

«)In, the value of the moft precious metal regulates the value H^A P.

of the whole coin. Twelve copper pence contain half a pound, y^-T^-^

•avoirdupoia, of copper, of not the beft: quality, which, before

it is coined,, is feldom worth fevenpence in filver. But as by

the regulation twelve fuch pence are ordered to exchange for a

fhilling, they are in the market confidered as worth a fliilling,

and a (hilling can at any time be had for them. Even before the

late reformation of the gold coin of -Great Britain, the gold, that

part of k at leaft: which circulated in London and its neighbour-

liood, was in general lefs degraded below its fl:andard weight

than the greater part of the filver. One and twenty worn and

defaced fliillings, however, were confidered as equivalent to a

guinea, which perhaps, indeed, was v/orn and defaced too, but

feldom fo much fo. The late regulations have brought the gold

coin as near perhaps to its ftandard weight as it is poilible to bring

the current coin of any nation ; and the order, to receive no

gold at the publick offices hut by v/eight, is likely to preferve it To

as long as that order is enforced. The filver coin ftill continues

4n the fame worn and degraded £late as before the reformation of

the gold coin. In the market, however, one and twenty (hillings^

of this degraded filver coin are ftill confidered as worth a guinea

of this excellent gold coin.

The- reformation of the gold coin has evidently raifed the valiia;,
of the filver coin which can be exchanged for it.

In the Englifti mint a pound weight of gold is coined into forty-
four guineas and a half, which at one and twenty fliillings the
guinea, is equal to forty-fix pounds fourteen Ihillings and fixpence»
An ounce of fuch gold coin, therefore, is worth 3/. lys. 10 d.^
in filver. In England no duty or feignorage is paid upon the
coinage, and he who carries a pound weight or an ounce v/eight of

Vox., L H ilandard

THE NATURE AND CAUSES OF

ftandard gold bullion to the mint, gets back a pound weight, or
an ounce weight of gold in coin, without any dedu6lion. Three
pounds feventeen fhillings and ten-pence halfpenny an ounce,
therefore, is faid to be the mint price of gold m England, or
the quantity of gold coin which the mint gives in return for
flandard gold bullion.

Before the reformation of the gold coin, the price of ftandard
gold bullion in the market had for many years been upwards of
3/. iSs. fometimes 3/. 19/. and very frequently 4/. an ounce;
that fum it is probable, in the worn and degraded gold coin, feldom
containing more than an ounce of ftandard gold. Since the reform-
ation of the gold coin, the market price of ftandard gold bullion
feldom exceeds 3/. lys. yd. an ounce. Before the reformation
of the gold coin the market price was always more or lefs above
the mint price. Since that reformation the market price has
been conftantly below the mint price. But that market price
is the fame whether it is paid in gold or in filver coin. The late
reformation of the gold coin, therefore, has raifed not only the
value of the gold coin, but likewife that of the filver coin in pro-
portion to gold bullion, and probably too in proportion to all other
commodities though the price of the greater part of other com-
modities being influenced by fo many other caufes, the rife in the
value either of gold or filver coin in proportion to them, may not
be fo difl:in6l and fenfible.

In the Englifh mint a pound weight of ftandard filver bullion
h coined into fixty-two {hillings, containing, in the fame manner,,
a pound weight of ftandard filver. Five ftiillings and two-pence
an ounce, therefore, is faid to be the mint price of filver in
England, or the quantity of filver coin which the mint gives in
return for ftandard filver bullion. Before the reformation of the
gold coin, the market price of ftandard filver bullion was, upon
8 different

THE WEALTH/ OF NATION.3.

different occafions, five {hillings and four-pence, five fliillings and C H^A P*

five-pence, five fhillings and fixpence, five fliillings and feven- u^^v^

pence, and veiy often five fliillings and eight-pence an ounce.

Five fliillings and feven -pence, however, feems to have been the

mofl common price. Since the reformation of the gold coin, the

market price of ftandard filver bullion has fallen occafionally t6

five fhiUings and three-pence, five fhillings and four-pence, and

five fhillings and five-pence an ounce, which lafl price it has fcarce

ever exceeded. Though the market price of filver bullion has

fallen confiderably fince the reformation of the gold coin, it has

not fallen fb low as the mint price.

In the proportion between the different metals in the Englifh
coin, as copper is rated very much above its real value, fo filver
is rated fomewhat below it. In the market of Europe, in the
French coin and in the Dutch coin, an ounce of fine gold ex-
changes for about fourteen ounces of fine filver. In the Englifh
coin, it exchanges for about fifteen ounces, that is> for more filver
than it is worth according to the common eflimation of Europe.
But as the price of copper in bars is not, even in England, raifed
by the high price of copper in Englifh coin, fo the price of filver
in bullion is not funk by the law rate of filver in Englifh coin^
Silver in bullion flill preferves its proper proportion to gold ; foi
the fame reafon that copper in bars preferves its proper proportion
to filver.

Upon the reformation of the filver coin in the reign of William
III. the price of filver bullion flill continued to be fomewhat above
the mint price, Mr. Locke imputed this high price to the per-
mifTion of exporting filvei- bullion, and to the prohibition of ex-
porting filver coin. This permiffion of exporting, he faid,
rendered the demand for filver bullioa greater than the demand

H 2 for

THE KATTJRE AND CAUSES OF

B O^O K for filver coin. But the number of people who want filver coin
V— ■y-^ for the common ufes of buying and felling at home, is furely
much greater than that of thofe who want filver bullion either for
the ufe of exportation or for any other ufe. There fubfifts at pre-
fent a like permiflion of exporting gold bullion and a like prohibi-
tion of exporting gold coin; and yet the price of gold bullion
has fallen below the mint price. But in the Englifh coin filver
was then, in the fame manner as now, under-rated in proportion
to gold } and the gold coin (which at that time too was not fup-
pofed to require any reformation) regulated then, as well as now,
the real value of the whole coin. As the reformation of the
filver coin did not then reduce the price of filver bullion to the
mint price, it is not very probable that a like reformation will do.-
fonow.

Were the filver coin brought back as near to its ftandard
weight as the gold, a guinea, it is probable, would, according
to the prefent proportion, exchange for more fiiver in coin than
it would purchafe in bullion. The filver coin containing its
full ftandard weight, there would in this cafe be a profit in
melting it down, in order, firft, to fell the bullion for gold coin^
and afterwards to exchange this gold coin for filver coin to be
melted down in the fame manner. Some alteration in the prefent
proportion feems to be the only method of preventing this incon-
veniency.

The inconveniency perhaps would be lefs if filver was rated' in
the coin as much above its proper proportion to gold as it is at
prefent rated below it provided it was at the fame time ena<51ed
that filver fhould not be a legal tender for more than the change
of a guinea ; in the fame manner as copper is not a legal tender
for more than the change of a fhiliing. No creditor could in
A this

THE WEALTH OF NATIO^S^, S3

tins cafe be cheated in confequence of the high valuation of filver CHAP,
in coin; as no creditor can at prefent be cheated in confequence of ^- — >rw
the high valuation of copper. The bankers only would fuffer by
this regulation. When a run comes upon them they fometimes
endeavour to gain time by paying in fixpences, and they would be
precluded by this regulation from this difcreditable method of evad-
ing immediate payment. They would be obliged in confequence
to keep at all times in their coffers a greater quantity of cafh than
at prefent j and though this might no doubt be a confiderable in-
conveniency to them, it would at the fame time be a confiderabla.^^
fccurity to their creditors*.

Three pounds feven teen fhillings and ten-pence halfpenny
(the mint price of gold) certainly does not contain, even in our
prefent excellent gold coin, more than an ounce of ftandard gold,
and it may be thought, therefore, fhould not purchafe more ftan-
dard bullion. But gold in coin is more convenient than gold in
bullion, and though, in England, the coinage is free, yet the
gold which is carried in bullion to the mint, can feldom be
returned in coin to the owner till after a delay of feveraf weeks <
In the prefent hurry of the mint, it could not be returned till after
a delay of feveral months * This delay is equivalent to a fmalt
duty, and .renders gold ia coin fomewhat more valuable than .an
equal quantity of gold in bulHon. If in the Englifh coin filver
was rated according to its proper proportion to gold, the price of
Clver bullion would probably fall below the mint price even without
any reformation of the filver coin ; th& value even of the prefent
worn and defaced filver coin being regulated by the value of th&
jcxcellent gold coin for which it can be changed.

A SMALL feign orage or duty upon the coinage of both gold and-
iilver, would probably increafe ftill more ihe fuperiority of thofe^

jiietals

THE NATURE AND CAUSES OF

K metals in com above an equal quantity of either of them in bul-»
— > Hon. The coinage would in this cafe increafe the value of the;
metal coined in proportion to the extent of this fmall duty; fair tl;e}
fame reafon that the fafliion incre^fes the vahie of plate in propor7
tion to the price of that fafliion. The fuperiority of coin above
bullion would prevent the melting down of the coin, and would
difcourage its exportation. If upon any publick exigency it ftiould
become neceflary to export the coin, the greater part of it would
foon return again of its own accord. Abioad it could fell only for
its weight in bullion. At home it would buy more than that,
weight. There would be a profit, therefore, in bringing it home
again. In France a feignorage of about eight per cent, is im-
pofed upon the coinage, and the French coin, when exported, is
laid to return home again of its own accord.

The occafional fluiSluations in the market price of gold and
filver bullion arife from the fame caufes as the like flu6Vuations in
that of all other commodities. The frequent lofs of thofe metals
from various accidents by fea and by land, the continual wafte of
them in gilding and plating, in lace and embroidery, in the tear
and wear of coin, and in the tear and wear of plate; require, in
all countries which polTefs no mmes of their own, a continual
importation in order to repair this lofs and this wafte. The mer-
chant importers, like all other merchants, we may believe, endea-
vour, as well as they can, to fuit their occafional importations to
what, they judge, is hkely to be the immediate demand. With,
all their attention, however, they fometimes over-do the bufmels,.
and fometimes under-do it. When they import more bullion than
is wanted, rather than incur the rifk and trouble of exporting it
again, they are fometimes willing to fell a part of it for fomething
Jefs than tlie ordinary or average price. When, on the otlier hand,
ihey import lefs tlian is wanted, they get fomething more than this

price.

THE WEALTH OF NATIONS*

price. But when, under all thofe occafional flu6luations, the mar- C HA P.
ket orice either of gold or filver bullion continues for feveral years Vti*" /— *^
together fteadily and conftantly, either more or lefs above, or more
or lefs below the mint price; we may be affured that this fteady
and coiiftant, either fuperiority or inferiority of price, is the effe6t
of fomething in the ftate of the coin, which, at that time, renders
a certain quantity of coin either of more value or of lefs value
than the precife quantity of bullion which it ought to contain.
The conftancy and fteadinefs of the efFe6l, fuppofes a propor-
tionable conftancy and fteadinefs in the caufe.

The money of any particular country is, at any particular time
and place, more or lefs an accurate meafure of value according as
the current coin is more or lefs exa6lly agreeable to its ftandard, or
contains more or lefs exactly the precife quantity of pure gold or
pure filver which it ought to contain. If in England, for example,
forty- four guineas and a half contained exaclly a pound weight
of ftandard gold, or eleven ounces of fine gold and one ounce of
alloy, the gold coin of England would be as accurate a meafure of
the a6tual value of goods at any particular time and place as the
nature of the thing would admit. But if, by rubbing and wearing,
forty- four guineas and a half generally contain lefs than a pound
weight of ftandard gold; the diminution, however, being greater
in fbme pieces than in others; the meafure of value comes to be
liable to the fame fort of uncertainty to which all other weights
and meafures are commonly expofed. As it rarely happens that
thefe are exa6^1y agreeable to their ftandard, the merchant adjufts
the price of his goods, as well as he can, not to what thofe weights
and meafures ought to be, but to what, upon an average, he
finds by experience, they actually are. In confequence of a like
diforder in the coin, the price of goods comes, in the fame manner,
to be adjufted, not to the quantity of pure gold or filver which the

coin

THE NATURE AND CAUSES OF

JBO^O K coin ought to contain, 'but to that which, upon an average, it
4— -v^-j is found by experience, it actually does contain.

Bv the money price of goods. It is to be obferv( d, I undcrfland
always the quantity of pure gold or filver for whicli they are fold,
without any regard to the denomination of the coin. Six (hillings
and eight-pence, for example, in the time of Edward I. I confida.'
as the fame money price with a pound fterling in the prefent times;
becaufe it contained as nearly as we can judge the fame quantity of
pure filver.

C H A P. VI.

^Of the component Parts of the Price of Commodities,

IN that early and rude ftate of fociety which preceeds both the
accumulation of ftock and the appropriation of land, the pro-
portion between the quantities of labour neceffary for acquiring
different objefts feems to be the only circumftance which can afford
any rule for exchanging them for one another. If among a nation
of hunters, for example, it ufually coils twice the labour to kill a ~
beaver which it does to kill a deer, one beaver fhould naturally
exchange for or be worth two deer. It is natural that what is
ufually the produce of two days or two hours labour fliould be
worth double of what is ufually the produce of one day's or or^e
hour's labour.

If the one fpecies of labour fliould be more fcvere than the other,
fome allowance will naturally be made for this fuperior hardfhip.^

and

TH£ WEALTH OF ISTATIONS.

. ( '

and the produce of one hour's labour in the one way may frequently
exchange for that pf ^wo hours labour in the other. '

Or if the one fpecies of labour requires an uncommon degree
of dexterity and ingenuity, the efteem which men have for fuch
talents, will naturally give a value to their produce, fuperior to
what would be due to the time employed about it. Such talents
can feldom be acquired but in confequence of long application,
and the fuperior value of their produce may frequently be no more
than a reafonable compenfation for the time and labour which
muft be fpent in acquiring them. In the advanced ftate of fociety,
allowances of this kind, for fuperior hardfhip and fuperior fkill,
are commonly made in the wages of labour; and fomething of the
fame kind muft probably have taken place in its earlieft and rudeft
period.

In this ftate of things the quantity of labour commonly employed
in acquiring or producing any commodity, is the only circum-
ftance which can regulate the quantity of labour which it ought
commonly to purchafe, command, or exchange for.

As foon as ftock has accumulated in the hands of particular
perfons, fome of them will naturally employ it in fetting to work
induftrious people, whom they will fupply with materials and
fubfiftence, in order to make a profit by the fale of their work,
or by what their labour adds to the value of the materials. In ex-
changing the complete manufaflure either for money, for labour,
or for other goods, over and above what may be fufficient to pay
the price of the materials, and the wages of the workmen, fome-
thing muft be given for the profits of the undertaker of the work
who hazards his ftock in this adventure. The value which the
workmen add to the materials, therefore, refolves itfelf in this

Vol. I. I cafe

j8 THE NATURE AND CAUSES OF

BOOK cafe into two parts, of which the one pays their wages, the other the
profits of their employer upon the whole ftock of materials and
wages which he advanced. He could have no intereft to employ
them, unlefs he expe6led from the fale of their work fomething
more than what was fufficient to replace his ftock to him ; and he
could have no intereft to employ a great ftock rather than a fmall
one, unlefs his profits were to bear fome proportion to the extent
of his ftock.

The profits of ftock, it may perhaps be thought, are only a
different name for the wages of a particular fort of labour, the
labour of infpe(5lion and dire6lion. They are, however, altogether
different, are regulated by quite different principles, and bear no
proportion to the quantity, the hardftiip, or the ingenuity of this
fuppofed labour of infpedion and dire6lion. They are regulated
altogether by the value of the ftock employed, and are greater or
fmaller in proportion to the extent of this ftock. Let us fuppofe,
for example, that in fome particular place, where the common
annual profits of manufa6luring ftock are ten per cent, there are
two different manufaiStures, in each of which twenty workmen are
employed at the rate of fifteen pounds a year each, or at the ex-
pence of three hundred a year in each manufa6lory. Let us fup-
>^ pofe too, that the coarfe materials annually wrought up in the

' one coft only feven hundred poundS;^ while the finer materials in

the other coft feven thoufand. The capital annually employed in the
one will in this cafe amount only to one thoufand pounds 3 whereas
that employed in the other will amount to feven thoufand three
hundred pounds. At the rate of ten per cent, therefore, the un-
dertaker of the one will expe6l an yearly profit of about one
hundred pounds only; while that of the other will expect about
feven hundred and thirty pounds. Bat though their profits are fo
very different, their labour of infpeiPdon and dire(5tion may be

either

cither altogether,^ pr y^r^ nearly the fame., ^ In many great works,
almofl the whole labour of this kind is frequently committed to
fbme principal clerk. His wages properly exprefs the value of
this labour of infpe6lion and direftion. Though in fettling them
fome regard is had commonly, not only to his labour and fkill,
but to the truft which is repofed in him, yet they never bear any
regular proportion to the capital of which he overfees the manage-
ment ; and the owner of this capital, though he is thus difcharged
of almoft all labour, flill expe6ls that his profits fliould bear a
regular proportion to it. In the price of commodities, there-
fore, the profits of flock are a fource of value altogether different
from the wages of labour, and regulated by quite different prin-
ciples.

In this flate of things, therefore, the quantity of labour com-
monly employed in acquiring or producing any commodity, is by
no means the only circumflance which can regulate the quantity
which it ought commonly to purchafe, command, or exchange for.
An additional quantity, it is evident, muft be due for the profits
of the flock which advanced the wages and furnifhed the materials
of that labour.

As fooh as the land of any country has all become private pro-
perty, the landlords, like all other men, love to reap where they
never fowed, and demand a rent even for its natural produce. The
wood of the forefl, the grafs of the field, and all the natural fruits
of the earth, which, when land was in common, cdfl only the
trouble of gathering them, come to have an additional price fixed
upon them. Men mull then pay for the licence to gather them;
and in exchanging them either for money, for labour, or for other
goods, over and above what is due, both for the labour of ga-
thering them, and for the profits of the ftock which employs that

I 2 labour.

THE NATURE AND CAUSES OF

labour, fome allowance muft be made for the price of the licence^
which conftitutes the firft rent of land. In the price, therefore,
of the greater part of commodities the rent of land comes in
this manner to conftitute a third fource of value.

In this ftate of things, neither the quantity of labour commonly
employed in acquiring or producing any commodity, nor the pro-
fits of the ftock which advanced the wages and furnifhed the ma-
terials of that labour, are the only circumftances which can regulate
the quantity of labour which it ought commonly to purchafe,
command, or exchange for. A third circumftance muft likewife
be taken into confideration ; the rent of the land ; and the commo-
dity muft commonly purchafe, command, or exchange for, an
additional quantity of labour, in order to enable the perfon who-
brings it to market to pay this rent.

The real value of all the different component parts of price is
in this manner meafured by the quantity of labour which they can,
each of them, purchafe or command. Labour meafures the value
not only of that part of price which refolves itfelf into labour, but
of that which refolves itfelf into rent, and of that which refolves
itfelf into profit.

In every fociety the price of every commodity finally refolves
itfelf into fome one or other, or all of thofe three parts; and in
every improved fociety, all the three enter more or lefs, as compo-
nent parts, into the price of the far greater part of commodities.

In the price of corn, for example, one part pays the rent of the
landlord, another pays the wages or maintenance of the labourers
and labouring cattle employed in producing it, and the third pays
the profit of the farmer. Thefe three parts feem either imme-

THE WEALTH OF NATIONS.

diately or ultimately to make up the whole price of corn. A fourth C
p'art it may perhaps be thought, is neceflary for replacing the ftock
of the farmer, or for compenfating the tear and v/ear of his la-
bourmg cattle, and other inftruments of hufbandry. But it muft
be confidered that the price of any inftrument of hulbandry, fuch
as a labouring horfe, is itfelf made up of the fame three parts the
r6nt of the larid upon which he is reared, the labour of tending and
rearing him, and the profits of the farmer who advances both the
rent of this land, and the wages of this labour. Though the price
of the corn, therefore, may pay the price as well as the mainte-
nance of the horfe, the whole price ftill refolves itfelf either im-
mediately or ultimately into the fame three parts of rent, labour^
and profit.

In the price of flour or meal, we muft add to the price of
the corn, the profits of the miller, and the wages of his fer-
vants; in .the price of bread, the profits of the baker, and the
wages of his fervantsj and in the price of both, the labour of
tranfporting the corn from the houfe of the farmer to that of
the miller, and from that of the miller to that of the baker, to-
gether with the profits of thofe who advance the wages of that
labour.

The price of flax refolves itfdf into the fame three parts as that
of corn. In the price of linen we mufl: add to this price the
wages of the flax-drefl^er, of the fpinner, of the weaver, of the
bleacher, &c. together with the profits of their refpedlive em-
ployers.

As any particular commodity comes to be more manufaflured,.,
that part of the price which refolves itfelf into wages and profit,
comes to be greater in proportion to that which refolves itfelf into

rent,.

THE NATURE AND CAUSES OF

B O^O K rei^ti' 111 fhe progrefs of the manufacture, not only the number
<— -V— J of profits increafe, but every fubfequent profit is greater than the
, foregoing; becaufe the <:apital from which it is derived muft al-
ways be greater. The capital which employs the weavers, for
example, muft be greater than that which employs the fpinners ;
becaufe it not only replaces that capital with its profits, but pays,
befides, the wages of the weavers; and the profits muft always
bear fome proportion to the capital.

In tlie moft improved focieties, however, there are always a
few commodities of which the price refolves itfelf into two parts
only, the wages of labour, and the profits of ftcck; and a ftill
fmaller number in which it confifts altogether in the wages of
labour. In the price of fea-fifli, for example, one part pays the
labour of the filhermen, and the other the profits of the capital
employed in the fifliery. Rent very feldom makes any part of it,
though it does fometimes, as I fliall fliew hereafter. It is other-
wife, at leaft through the greater part of Europe, in nvbv fifheries.
A falmon fifhery pays S rent, and rent, though it cannot well be
called the rent of land, makes a part of the price of a falmon
as well as wages and profit. In fome parts of Scotland a few poor
people make a trade of gathering, along the fea fhore, thofe little
variegated ftones commonly known by the name of Scotch Pebbles.
The price which is paid to them by the flone-cutter is altogether
the wages of their labour j neither rent nor profit make any part
of it.

But the whole price of every commodity muft ftill finally re-
folve itfelf into fome one or other or all of thofe three parts; as
whatever part of it remains after paying the rent of the land, and
the price of the whole labour employed in raifing, manufaduring,
and bringing it to market, muft neceftarily be profit to fomebody.

I :7 • . As

THE WEALTH OF NATIONS.

As the price or exchangeable vahie of every particular commo- C HA P.
dity, taken feparately, refolves itfelf inta fome one or other or all u— v—
of thofe three parts ; fo that of all the commodities which compofe
the whole annual produce of the labour of every country, taken
complexly, muft refolve itfelf into the fame three parts, and be
parcelled out among different inhabitants of the country, either
as the wages of their labour, the profits of their ftoek, or the rent
of their land. The whole of what is annually either collefled or
produced by the labour of every fociety, or what comes to the fame
thing, the whole price of it, is in this manner originally diflributed
among fome of its different members. Wages, profit, and rent,
are the three original fources of all revenue as well as of all ex-
changeable value. All other revenue is ultimately derived from
fome one or other of thefe;

Whoever derives his revenue from a fand which is his ov/n,.
muft draw it either from his labour, from his flock, or from his
land. The revenue derived.from labour is called wages. That de-
rived from flock, by the perfon who manages or employs it, is
called profit. That derived from it by the perfon who does not
employ it himfelf, but lends it to another, is called the interefl or
the ufe of money. It is the compenfition which the borrower pays
to the lender, for the profit which he has an opportunity of making
by the ufe of the money. Part of that profit naturally belongs to
the borrower, who runs the rifk and takes the trouble of employing
it J and part to the lender, who affords him the opportunity of
making this profit. The interefl of money js always a derivative
revenue, which, if it is not paid from the profit which is made by
the ufe of the money, mufl be paid from fome other fource of
revenue, unlefs perhaps the borrower is a fpendthrift, who con-
tracts a fecond debt in order to pay the interefl of the firfl. The
revenue which proceeds altogether from land, is called rent, and

belongs

-64

THE NATURE AND ,CAUSES OF

B O^O K belongs to the landlord. The revenue x)f the farmer is 49rived
V".v^ partly from his labour, and partly from ^lis litock. Tp jiim, ,hn<^
is only the inftrument which enables him to earn the :vvages pf this
labour, and to make the profits of this ^Ipck. All .taxes, and all
the revenue which is founded upon them, all falaries, penfions,
and annuities of every kind, are ultimately derived frppi fome one
or other of thofe three original fourges of revenvie, and are paid
either immediately or mediately from the ,w^^ of jlab^ur, the
profits of ftock, or the rent of land.

When thofe three different forts of revenue belong to different
"perfons, they are readily diftinguifhed j but when they belong to
the fame they are fometimes confounded with one another, at leaft
in common language.

A GENTLEMAN who farms apart of his own. eftate, after paying
the expence of cultivation, Ihould gain both the rent of the land-
lord and the profit of the farmer. He is apt to denominate, how-
ever, his whole gain, profit, and thus confounds rent with profit,
at leaft in common language. The greater part of our North
A,merican and Weft Indian planters are in this fit uation. They
farm, the greater part of them, their own. eftates, and accordingly
•we feldom hear of the rent of a plantation, but frequently of its
.profit.

Common farmers feldom employ any overfeer to direfl the
general operations of the farm. They generally too work a good
deal with their own hands, as ploughmen, harrowers, &c. What
remains of the crop after paying the rent, therefore, fliould not
only replace to them their ftock employed in cultivation, together
with its oi'dinary profits, but pay them the wages which are due
to them, both as labourers and overfeers. Whatever remains,

however.

THE WEALTH OF NATIONS.

however, after paying the rent and keeping up the ftock, is called
profit. But wages evidently make a part of it. The farmer, by
faving thefe wages, muft neceflarily gain them. Wages, therefore,
are in this cafe confounded with profit.

An independent manufa6lurer, who has ftock enough both to
purchafe materials and to maintain himfelf till he can carry his
work to market, ftiould gain both the wages of a journeyman, who
works under a mafter, and the profit which that mafter makes by
the fale of his work. His whole gains, however, are commonly
called profit, and wages are, in this cafe too, confounded with
profit.

A GARDENER who cultlvatcs his own garden with his own
hands, unites in his own perfon the three different chara61:ers, of
landlord, farmer, and labourer. His produce, therefore, fhould
pay him the rent of the firft, the profit of the fecond, and the
wages of the third. The whole, however, is commonly confidered
as the earnings of his labour. Both rent and profit are, in this
cafe, confounded with wages.

As in a civilized country there are but few commodities of which
the exchangeable value arifes from labour only, rent and profit
contributing largely to that of the far greater part of them, fo the
annual produce of its labour will always be fufficient to purchafe
or command a much greater quantity of labour than what was em-
ployed in raifing, preparing, and bringing that produce to market.
If the fociety was annually to employ all the labour which it can
annually purchafe, as the quantity of labour would increafe greatly
every year, fo the produce of every fucceeding year would be of vaftly
greater value than that of the foregoing. But there is no country
in which the whole annual produce is employed in maintaining the

Vol. I. K induftrious.

CHAP.
VI.

TKE NATURE AND CAUSES OF

B O^O K induftriou&. The idle every where confume a great part of it r
^f^'^mj and according to the different proportions in which it is annually
divided between thofe two different orders of people, its ordinary
or average value muft either annually increafe, or diminifh, or
continue the &me from one year to another.

CHAPV VII.

Of the natural and market Price of Commodities,

THERE is in every fociety or neighbourhood an; ordinary or
average rate both, of wages and profit in every different em-
ployment of labour and; flock. This rate is naturally rcgulatedj,
a3 I fhallfhow hereafter, partly by the general circumftances of the
fociety, their riches or poverty,, their advancing,. Hationary, or.
declining condition-; and. partly by the particular nature of eacb
employment.

There is likewife in every fociety or ndghbourhood an ordinary
or average rate of rent, which is regulated too, as I fhall fhow
hereafter, partly by the general circumftances of the fociety or
neighbourhood in which the land is fituated^ and partly by the
natural or improved fertihty of the landi

These ordinary or average rates may be called the natural
rates of wages, profit, and rent,, at the time and place in which
they commonly prevail.

When the price of any commodity is neither more nor lefs
than what is fufilcient to pay the rent of the land, the wages of the
7 labour^

THE WEALTH OF NATIONS.

labour, aiid the profits of the ftock employed in raifing, preparing,
and bringing it to market, according to their natural rates,
the commodity is then fold for what may be called its natural
price.

The commodity is then fold precifely for what it is woWli,
or for what it really cofts the perfon who brings it to market ; fo^
though in common language what is called the prime cofl: of an/
commodity does not comprehend the profit of the perfon who is
to fell it again, yet if he fells it at a price which does not allow hint
the ordinary rate of profit in his neighbourhood, he is evidently'
a lofer by the trade ; fince by employing his ftock in fome other way'
he might have made that profit. His profit, befides, is his revenue,
the proper fund of his fubfifleiice. As, while he is preparing and
bringing the goods to market, he advances to his workmen their
wages, or their fubfiftence, fo he advances to himfelf, in the fame
manner, his own fubfiftence, which is generally fuitable to the
profit which he may reafonably expe€l from the fale of his goods.
Unlefs they yield him tliis profit, therefore, they do not repay
him what they may very properly be faid to have really coik
him.

Though the price, therefore, which leaves hun this profit, is
not always the loweft at which a dealer may fometimes fell his
goods, it is the loweft at which he is likely to fell them for any^
confiderable timej at leaft where there is perfe6l liberty, or where
he may change his trade as often as he pleafes, -

The a6lual price at which any commodity is commonly Cold
is called its market price. It may either be above, or below, or'
exa6lly the fame with its natural price*

K 2 Tut

THE NATURE AND CAUSES OF

BO^Ok The market price of every particular commodity is regulated
-V— -J by the proportion between the quantity which is a6lually brought
to market, and the demand of thofe who are wilUng to pay the
natural price of the commodity, or the whole value of the rent,
labour, and profit, which muft be paid in order to bring it thither.
Such people may be called the efFe<5tual demanders, and their de-
mand the efFe6lual demand; fmce it may be fufficient to effectuate
the bringing of the commodity to market. It is different from
the abfolute demand. A very poor man may be faid, in fome
fenfe, to have a demand for a coach and fix j he might like to have it }
but his demand is not an effeftual demand, as the commodity can
never be brought to market in order to fatisfy it.

When the quantity of any commodity which is brought to
market falls fhort of the effeflual demand, all thofe who are wil-
ling to pay the whole value of the rent, wages, and profit, which
muft be paid in order to bring it thither, cannot be fupplied with the
quantity which they want. Rather than want it altogether, fome of
them will be willing to give more. A competition will immediately
begin among them, and the market price will rife more or lefs
above the natural price, according as the greatnefs of the deficiency
increafes more or lefs the eagernefs of this competition. The
fame deficiency will generally occafion a more or lefs eager com-
petition, according as the acquifition of the commodity happens to-
be of more or lefs importance to the competitors. Hence the ex-
orbitant price of the neceffaries of life during the blockade of a
town or in a famine.

When the quantity brought to market exceeds the effeflual
demand, it cannot be all fold to thofe who are willing to pay the
whole value of the rent, wages and profit, which muft be paid
in order to bring it thither. Some part muft be fold to thofe who

are

THE WEALTH OF NATIONS

are willing to pay lefs, and the low price which they give for it ^ H
muft reduce the price of the whole. The market price will fink
more or lefs below the natural price, according as the greatnefs
of the excefs increafes more or lefs the competition of the fellers,,
or according as it happens to be more or lefs important to them
to get immediately rid of the commodity. The fame excefs in
the importation of perifhable, will occafion a much greater com-
petition than in that of durable commodities in the importation
of oranges, for example, than in that of old iron.

When the quantity brought to market is juft fufficient to fupply
the effedlual demand and no more, the market price naturally
comes to be either exa6lly, or as nearly as can be judged of, the
fame with the natural price. The whole quantity upon hand
can be difpofed of for this price, and cannot be difpofed of for
more. The competition of the different dealers obliges them
all to accept of this price, but does not oblige them to accept
of lefs.

The quantity of every commodity brought to market naturally
fuits itfelf to the effedual demand. It is the intereft of all thofe
who employ their land, labour, or ftock, in bringing any com-
modity to market, that the quantity never fliould exceed the effec-
tual demand j and it is the intereft of all other people that it
never ftiould fall fhort of it.

If at any time it exceeds the effe£Vual demand, fame of the
component parts of its price muft be paid below their natural
rate. If it is rent, the intereft of the landlords will immediately
prompt them to withdiuvv a part of their land; and if it is
wages or profit, the intereft of the labourers in the one cafe,, and
of their employers in the other, will prompt them to withdraw

a. part

THE NATURE AND CAUSES OF

B O^O K a part of their labour or flock from this employment. The
c*-;— quantity brought to market will foon be no more than fufficient
to fupply the effectual demand. All the different parts of its
price will rife to theii* natural rate, aaid the whole price to itt
natural price.

If, on the contrary, the quantity brought to market fhould
ut any time fall fhort of the e{fe6lual demand, fome of the com-
ponent parts of its price mufl: rife above their natural rate. If it
as rent, the interefl of all other landlords will naturally prompt
them to prepare more land for the raifmg of this commodity ; if it
is wages or profit, the interefl of all other labourers and dealers
will foon prompt them to employ more labour and flock in pre-
paring and bringing it to market. The quantity brought thither'
will foon be fufficient to fupply the effe6lual demand. All the
different parts of its price will foon fmk to their natural rate*
and the whole price to its natural price.

The natural price, therefore, is, as it were, the central price,"
to which the prices of all commodities are continually gravitating.*
Different accidents may fometimes keep them fufpended a good
deal above it, and fometimes force them down even fomewhat
below it. But whatever may be the obflacles which hinder them
from fettling in this center of repofe and continuance, they are
conflantly tending towards it.

The whole quantity of induftry annually employed in oixler
to bring any commodity to market, naturally fuits itfelf in this
manner to the effe6lual demand. It naturally aims at bringing
, always that precife quantity thither which may be fufficient to
fupply, and no more than fupply, that demand.

But

THE WEALTH OF NATIONS.

But in fome employments the fame quantity of induftry will ^yj^^*
in different years produce very different quantities of commodities ; u-^v*— J
while in others it will prochice always the fame,, or very nearly
the fame. The fame number of labourers in hu^bandry will,
in different years, produce very different quantities of corn, wine,
oil, hops, &c. But the fame number of fpinners and weavers
will every year produce the fame or very nearly the fame quantity
of linen and woollen cloth. It is only the average produce of
the one fpecies of induftry which can be fuited in any refpe6t to
the effectual demand ; and as its a6tual produce is frequently much
greater and frequently much lefs than its average produce, the
quantity of the commodities brought tO' market will fometimes
exceed a good deal, and fometimes fall fhort a good deal of the
effectual demand. Even though that demand therefore fliould
continue always the fame, their market price will be liable to
great fluctuations, will fometimes fall a good deal below, and
fometimes rife a good deal above their natural price. In the other
ipecies of induflry, the produce of equal quantities of labour
being always the fame or very nearly the fame, it can be more
exaftly fuited to the effectual demand. While that demand con-
tinues the fame, therefore, the market price of the commodities
is likely to do fo too, and to be either altogether, or as nearly as
can be }udged of, the fame with the natural price. That the
price of linen and woollen cloth is liable neither to fuch frequent
Bor to fuch great variations as the price of corn,, every man's ex-
perience will inform: him. The price of the one fpecies of com-
modities varies only with the variations in the demand That of
the otlier varies, not only with the variations in the demand,
but with the much greater and more frequent variations in the
quantity of what is brought to market in order to fupply that
demand.

The

THE NATURE AND CAUSES OF

BO^OK The occafional and temporary flu6luatlons in the market price
of any commodity fall chiefly upon thofe parts of its price which
refolve themfelves into wages and profit. That part which refolves
itfelf into rent is lefs affe6led by them. A rent certain in money
is not in the leaft affedled by them either in its rate or in its
value. A rent which confifts either in a certain proportion or
in a certain quantity of the rude produce, is no doubt affeded in
its yearly value by all the occafional and temporary flu6luations
in the market price of that rude produce: but it is feldom affected
by them in its yearly rate. In fettling the terms of the leafe, the
landlord and farmer endeavour, according to their beft judge-
ment, to adjuft that rate, not to the temporary and occafional,
but to the average and ordinary price of the produce. -

Suck flu6luations affed both the value and the rate either of
wages or of profit, according as the market happens to be either
over-flocked or under-ftocked with commodities or with labour ;
with work done, or with work to be done. A publick mourning
raifes the price of black cloth (with which the market is almoft
always under-ftocked upon fuch occafions) and augments the
profits of the merchants who polfefs any confiderable quantity of
it. It has no effedt upon the wages of the weavers. The market
is under-ftocked with commodities, not with labour ; with work
done, not with work to be done. It raifes the wages of journey-
men taylors. The market is here under-ftocked with labour.
There is an effeftual demand for labour, for more work to be
done than can be had. It finks the price of coloured filks and
cloths, and thereby reduces the profits of the merchants who have
any confiderable quantity of them upon hand. It finks too the
wages of the workmen employed in preparing fuch commodities,
for which all demand is ftopped for fix months, perhaps for a

twelvemonth.

THE WEALTH OF NATIONS.

twelvemonth. The market is here overftocked both with commo- C

dities and with labour.

But though the market price of every particular commodity-
is in this manner continually gravitating, if one may fay fo,
towards the natural price, yet fometimes particular accidents, fome-
times natural caufes, and fometimes particular regulations of
police, may, in many commodities, keep up the market price, for
a long time together, a good deal above the. natural price.

When by an increafe in the effeflual demand, the market price
of fome particular commodity happens to rife a good deal above
the natural price, thofe who employ their ftocks in fupplying that
market are generally careful to conceal this change. If it was
commonly known, their great profit v/ould tempt fo many new
rivals to employ their ftocks in the fame way that, the efFe6tual
demand being fully fupplied, the market price would foon be re-
duced to the natural price, and perhaps for fome time even
below it. If the market is at a great diftance from the refidence
of thofe who fupply it, they may fometimes be able to keep the
fecret for feveral years together, and may fo long enjoy their extra-
ordinary profits without any new rivals. Secrets of this kind
however, it muft be acknowledged, can feldom be long kept;
and the extraordinary profit can laft very little longer than they
are kept.

Secrets in manufa6lures are capable of being longer kept
than fecrets in trade. A dyer who has found the means of pro-
ducing a particular colour with materials which coft only half
the price of thofe commonly made ufe of, may, with good manage-
ment, enjoy the advantage of his difcovery as long as he lives,
and even leave it as a legacy to his pofterity. His extraordinary

Vol. I. L gains

^4 THE NATURE AND CAUSES OF

BOOK gains arife from the high price which is paid for his private labour.

^ -y'*^^ They properly confift in the high wages of that labour. But as
they are repeated upon every part of his ftock, and as their whole
amount bears, upon that account, a regular proportion to it,
they are commonly confidered as extraordinary profits of ftock.

Such enhancements of the market price are evidently the effefls
of particular accidents, of which, however, the operation may
fometimes laft for many years together.

Some natural produdtions require fuch a Angularity of foil and
fituation, that all the land in a great country, which is fit for pro-
ducing them, may not be fufhcient to fupply the efFe6lual demand.
The whole quantity brought to market, therefore, may be dif-
pofed of to thofe who are wiUing to give more than what is fufhcient
to pay the rent of the land which produced them, together with the
wages of the labour, and the profits of the ftock which were em-
ployed in preparing and bringing them to market, according to their
natural rates. Such commodities may continue to be fold at this
high price for whole centuries together, and that part of it which
refolves itfelf into the rent of land is in this cafe the part which
is generally paid above its natural rate. The rent of the land
which affords fach lingular and efteemed produilions, like the
rent of fome vineyards in France of a peculiarly happy foil and
fituation, bears no regular proportion to the rent of other equally
fertile and equally well cultivated land in its neighbourhood. The
wages of the labour and the profits of the ftock employed in
bringing fuch commodities to market, on the contrary, are feldoni
out of their natural proportion to thofe of the other employments
of labour and ftock in their neighbourhood.

Such enhancements of the market price are evidently the
efFe6t of natural caufes which may hinder the effectual demand

from

THE WEALTH OF NATIONS*

from ever being fully fupplied, and which may continue, therefore,
to operate forever.

A MONOPOLY granted either to an individual or to a trading
company has the fame efFe6l as a fecret in trade or manufa6lures.
The monopolifts, by keeping the market conftantly underftocked,
by never fully fupplying the effe6tual demand, fell their eommp-
dities much above the natural price, and raife their emoluments,
whether they confill in wages or profit, greatly above their natu-
ral rate.

The price of monopoly is upon every occafion the higheft which
can be got. The natural price, or the price of free competition, on
the contrary, is the loweft which can be taken, not upon every
occafion, indeed, but for any confiderable time together. The one
is upon eveiy occafion the highefl: which can be fqueezed out of
the buyers, or which, it is fuppofed, they will confcnt to give:
The other is the loweft which the fellers can commonly afford
to take, and at the fame time continue their bufinefs.

The exclufive privileges of corporations, ftatutes of apprentice-
Ihip, and all thofe laws which reftrain, in particular employments,
the competition to a fmaller number than might otherwife go
into them, have the fame tendency, though in a lefs degree. They
are a fort of enlarged monopolies, and may frequently, for ages to-
gether and in whole claffes of employments, keep up the market
price of particular commodities above the natural price, and main-
tain both the wages of the -labour and the profits of the ftock
employed about them fomewhat above their natural rate.

Such enhancements of the market price may laft as long as
the regulations of police which give occafion to them.

CHAP.
" VII.

The

THE NATURE AND CAUSES OF

BOOK The market price of any particular commodity, though it may.
J,

w 'V"-J continue long above, can feldom continue long below its natural
price. Whatever part of it was paid below the natural rate, the
perfons whofe intereft it afFe6led would immediately feel the lofs,.
and would immediately withdraw either fo much land, or fo much
labour, or fo much ftock, from being employed about it, that the
quantity brought to market would foon be no more than fufRcient
to fupply the effe6lual demand. Its market price, therefore, would
foon rife to the natural price. This at leaft would be the cafe,
where there was perfe6l liberty.

The fame ftatutes of apprenticefliip and other corporation laws
indeed, which, when a manufa6lure is in profperity, enable the
workman to raile his wages a good deal above their natural rate,
fometimes oblige him, when it decays, to let them down a good
deal below it. As in the one cafe they exclude many people from
his employment, fo in the other they exclude him from many
employments. The effefl of fuch regulations, however, is not
near fo durable in fmking the workman's wages below, as in raifnig
them above their natural rate. Their operation in the one way
may endure for many centuries, but in the other it can lafl: no
longer than the lives of fome of the workmen who were bred to
the bufinefs in the time of its profperity. When they are gone, the
number of thofe who are afterwards educated to the trade will natu-
rally fuit itfelf to the efFedual demand. The police muft be as violent
as that of Indoftan or antient Egypt (where every man was bound
by a principle of religion to follow the occupation of his father,
and*was fuppofed to commit the moft horrid facrilege if he changed
it for another) which can in any particular employment, and for
feveral generations together, fmk either the wages of labour or.
the profits of ftock belov/ their natural rate.

This

THE WEALTH OF NATIONS.

This is all that I think neceflary to be obferved at prefent con- C H^A P..
eerning the deviations, whether occafional or permanent, of c*-y--H-
the market price of commodities from the natural price.

The natural price itfelf varies with the natural rate of each of
its component parts, of wages, profit, and rent ; and in every
fociety this rate varies according to their circumftances, accord-
ing to their riches or poverty, their advancing, ftationary, or de-
clining condition. I fliall, in the four following chapters, endea-
vour to explain, as fully and dij[lin6lly as I can, the caufes of thofe
different variations.

First, I fliall endeavour to explain what are the circumftances:
which naturally determine the rate of wages, and in what manner
thofe circumftances are affe61:ed by the riches or poverty, by the
advancing, ftationary, or declining ftate of the fociety.

Secondly, I fliall endeavour to fliow what are the circum-
ftances which naturally determine the rate of profit, and in what
manner too thofe circumfl:ances are affefted by the like variations
in the fl:ate of the fociety,.

Though pecuniary wages and profit are very different in tlie
different employments of labour and fl:ock ; yet a certain, propor-
tion feems commonly to take place between both the pecuniary
wages in all the different employments of labour, and the pecu-
niary profits in all the different employments of flock. This,
proportion, _it will appear hereafter, depends partly upon the
nature of the different employments, and partly upon the
different laws' and policy of the fociety in which they are carried
on. But thougli in many refpefts dependent upon the laws and
policy, this proportion feems to be little affeded by the riches

or.-

THE NATURE AND CAUSES OF

B O^O K or poverty of that fociety j by its advancing, ftationary, or de-
w— y-— i> dining condition ; but to remain the fame or very nearly the
fame in all thofe different ftates. I fhall, in the third place, en-
deavour to explain all the different circumftances which regulate
this proportion.

In the fourth and lafl place I (liall endeavour to (how what arc
the circumftances which regulate the rent of land, and which either
raife or lower the real price of all the different fubftances which
k produces,

CHAP. VIIL

Of the Wages of Labour.

TH E produce of labour conftitutes the natural recompence or
wages of labour.

In that original ftate of things, which precedes both the appro-
priation of land and the accumulation of ftock, the whole pro-
duce of labour belongs to the labourer. He has neither landlord
nor mafter to fhare with him.

Had this ftate continued, the wages of labour would have aug-
mented with all thofe improvements in its produflive powers, to
which the divifion of labour gives occafion. All things would
gradually have become cheaper. They would have been produced
by a fmaller quantity of labour ; and as the commodities produced
by equal quantities of labour would naturally in this ftate of
7 things

THE WEALTH OF NATIONS.

things be exchanged for one another, they would have been pur- ^yjjj^*
chafed likewife with the produce of a fmaller quantity. v^-,— ^

But though all things would have become cheaper in reality,
in appearance many things might have become dearer than be-
fore, or have been exchanged for a greater quantity of other goods.
Let us fuppofe, for example, that in the greater part of employ-
ments the produ6live powers of labour had been improved to ten-
fold, or that a day's labour could produce ten times the quantity
of work which it had done originally; but that in a particular em-
ployment they had been improved only to double, or that a day's
labour could produce only twice the quantity of work which it had
done before. In exchanging the produce of a day's labour in the
greater part of employments, for that of a day's labour in this par-
ticular one, ten times the original quantity of work in them would
purchafe only twice the original quantity in it. Any particular
quantity in it, therefore, a pound weight, for example, would
appear to be five times dearer than before. In reality, however,
it would be twice as cheap. Though it required five times the
quantity of other goods to purchafe it, it would require only half
the quantity of labour either to purchafe or to produce it. The
acquifition, therefore, would be twice as eafy as before.

But this original ftate of things, in which the labourer enjoyed
the whole produce of his own labour, could not laft beyond the
firft introduction of the appropriation of land and the accumulation
of flock. It was at an end, therefore, long before the mofl con-
fiderable improvements were made in the productive powers of
labour, and it would be to no purpofe to trace further what might
have been its efFe6ls upon the recompence or wages of labour.

As foon as land becomes private property, the landlord demands
a ftiare of whatever produce the labourer can either raife, or col-
let

THE NATURE AND CAUSES OF

lecl from it. His rent makes the firft dedu6lion from the produce
of the labour which is employed upon land.

It feldom happens that the perfon ,who tills the ground has
wherewithal to maintain himfelf till he reaps the harveft. His
maintenance is generally advanced to him from the ftock of a
ni after, the farmer who employs him, and who would have no
intereft to employ him, unlefs he was to fhare in the produce of
his labour, or unlefs his ftock was to be replaced to him with a
profit. This profit makes a fecond dedu6lion from the produce
of the labour which is employed upon land^

The produce of almoft all other labour is liable to the like
deduction of profit. In all arts and manufa6tures the greater part
-of the woikmen ftand in need of a mafter to advance them the
materials of their work, and their wages and maintenance till it be
compleated. He fhares in the produce of their labour, or in the
value which it adds to the materials upon which it is beftowed;
and in this ftiare confifts his profit.. .

It fometimes happens, indeed, that a fingle independant work-
man has ftock fuflicient both to purchafe the materials of his work,
and to maintain himfelf till it be compleated. He is both mafter
and workman, and enjoys the whole produce of his own labour,
or the whole value which it adds to tlie materials upon which
it is beftowed. It includes what are ufually two diftinft revenues,
belonging to two diftin6l perfons, the profits of ftock, md the
wages of labour.

Such cafes, however, are not very frequent, and in every part
of Europe, twenty workmen ferve under a mafter for one that is
independant; and the wages of labour are every where underftood

'THE WEALTH OF NATIONS.

to be, what they ufually are, when the labourer is one perfon, and ^yj^j^*
the owner of the ftock which employs him another. v.— -v— J

What are the common wages of labour depends every where
upon the contrail ufually made between thole two parties, whofe
intereits are by no means the fame. The workmen defire to get as
much, the mafters to give as little as poflible. The formei* are
difpofed to combine in order to raife, the latter in order to lower
the wages of labour.

It is not, however, difficult to forefee which of the two parties
muft, upon all ordinary occafions, have the advantage in the dif-
pute, and force the other into a comphance with their terms.
The mafters, being fewer in number, cannot only combine more
eafily, but the law authorifes their combinations, or at leaft does
not prohibit them, while it prohibits thofe of the workmen. We
have no a6ls of parliament againft combining to lower the price of
work; but many againft combining to raife it. In all fuch dif-
putes the mafters can hold out much longer. A landlord, a far-
mer, a mafter manufa61:urer, or merchant, though they did not
employ a fmgle workman, could generally live a year or two upon
the ftocks which they have already acquired. Many workmen
could not fubfift a week, few could fubfift a month, and fcarce
any a year without employment. In the long-run the workman
may be as neceffary to his mafter as >hi3 mafter is to liim^ but the
neceffity is not fo immediate.

We rarely hear, it has been faid, of the combinations of mafters ;
though frequently of thofe of workmen. But whoever imagines,
upon this account, that mafters rarely combine, is as ignorant of
the world as of the fubjed. Mafters are always and every whefe
in a fort of tacit, but conftant and uniform combination, not to

Vol. I. M raife

THE NATURE AND CAUSES OF

ralfe the wages of labour above their a6lual rate. To violate this
combination is every where a moft unpopular a6lion, and a fort
of reproach to a mafter among his neighbours and equals. We
feldom, indeed, hear of tliis combination, becaufe it is the ufual,.
and one may fay, the natural ftate of things which nobody ever
hears of. Mafters too fometimes enter into particular combina-
tions to fmk the wages of labour even below this rate. Thefe
are always conduced with the utmoft filence and fecrecy, till. the.
moment of execution, and when the workmen yield, as they fome-
times do, without refiftance, though feverely felt by them, they
are never heard of by other people. Such combinations, however,
are frequently refifted by a contrary defenfive combination of tlie.
workmen; who fometimes too, without any provocation of this
kind, combine of their own accord to raife the price of their la-
bour. Their ufual pretences are, fometimes, the high price of pro-
vifions ; fometimes the great profit which their raaflers make by their
work. But whether their combinations be ofFenlive or defenfive
they are always abundantly heard of. In order to bring the point
to a fpeedy decilion, they have always recourfe to the loudeft cla-
mour, and fometimes to the moft fliocking violence and outrage..
They are defperate, and a6l with the folly and extravagance of def-^
perate men, whomuft ftarve or frighten their mafters into an im-
mediate compliance with their demands. The mafters upon thefe
oecafions are juft as clamorous upon the other fide, and never
ceafe to call aloud for the affiftance of the civil magiftrate, and the
rigorous execution of thofe laws which have been enaded with fo
much feverity againft the combinations of fervants, labourers, and
journeymen. The workmen, accordingly, very feldom derive any
advantage from the violence of thofe tumultuous combinations^
which, partly from the interpofition of the civil magiftrate, partly
from the fuperior fteadinefs of the mafters, partly from the ne-
ceffity which the greater part of the workmen are under of fub-

mittino;

THE WEALTH aP NATIONSi ^3

mitting for the fake of prefent fubfiftence, generally end in no- ^^j^^*
thing, but the punifhment or ruin of the ringleaders. (..—y— y

But though in difputes with their workmen, mafters muH
generally have the advantage, there is however a certain rate below
which it feems impoffible to reduce, for any confiderable time,,
the ordinary wages even of the loweft fpecies of labour.

A MAN muft always live by his work, and his wages muft at
leaft be fufficient to maintain him. They muft even upon moft
occafions be fomewhat more; otherwife it would be impoffible to
bring up a family, and the race of fuch workmen could not laft
beyond the firft generation. Mr. Cantillon feems, upon this ac-
count, to fuppofe that the loweft fpecies of common labourers
muft every where earn at leaft double their own maintenance, in.
order that one with another they may be enabled to bring up two
children j the labour of the wife, on account of her necefTary at-
tendance on the children, being fuppofed no more than fufficient
to provide for herfelf. But one-half the children born, it is com-
puted, die before the age of manhood. The pooreft labourers,
therefore, according to this account, muft, one with another, attempt
to rear at leaft four children, in order that two may have an equal
chance of living to that age. But the neceffary maintenance of
four children, it is fuppofed, may be nearly equal to that of one
man. The labour of an able-bodied flave, the fame author adds,
is computed to be worth double his maintenance ; and that of the
meaneft labourer, he thinks, cannot be worth lefs than that of
an able-bodied flave. Thus far at leaft feems certain, that, in order
to bring up a family, the labour of the huiband and wife together
muft, even in the loweft fpecies of common labour, be able to
earn fomething more than what is precifely neceflary for their own
maintenance; but in what proportion, whetlier in that above

M 2 . mentioned.

84 THE NATURE AND CAUSES OF

B O^O K mentioned, or in any other, I fhall not take upon me to deter-
mine.

There are certain circumflances, however, which fometimes;
give the labourers an advantage, and enable them to raife their
wages confiderably above this rate; evidently the lowefl which is.
confiftent with common humanity.

When in any country the demand for thofe who live by wages;,
labourers, journeymen, fervants of every kind, is continually in-
creafing; when every year furniflies employment for a greater
number than had been employed the year before, the workmei^
have no occafion to combine in order to raife their wages. The
fcarcity of hands occafions a competition among mailers, who bid
againft one another in order to get them, and thus voluntarily
break through the natural combination of mafters not to raife
wages.

The demand for thofe who live by wages, it is evident, cannot
increafe but in proportion to the increafe of the funds which are
deftined for the payment of wages. Thefe funds are of two kinds
firft, the revenue which is over and above wh^t is necefTaiy for the
maintenance; and, fecondly, the flock which is over and above
what is neceffary for the employment of their maflers.

When the landlord, annuitant, or monied man, has a greater
revenue than what he judges fufficient to maintain his own family,
he employs either the whole or a part of the furplus in maintaining
one or more menial fervants. Increafe this furplus, and he wdU
naturally increafe the number of thofe fervants.

When an independant workman, fuch as a weaver or fhoe-
maker, has got more flock than what is fufficient to purchafe
7

THE WEALTH "OF NATIONS. %

tlic materials of his ov^n work, and to m*llfttairi himfetf till he C A P.
can difpofe of it, he naturally ehiploys one '6t more journeymen u- v'-;
-with the furplus, in ordfer tD make a profit by their work. Ih-
creafe this furplus, and he will liaturilly in^reafe the number of
his journeymen.

Ths demand for thofe who live by wages, therefore, riecdlBnly
increafes with the increafe of the revenue and ftock of every coiiri-
try, and cannot poffibly increafe without it. The iiltreafe of reVefluc
and ftock is the increafe of national wealth. Thd demaild for
thofe who live by wages, therefore, naturally increafes with the
increafe of national wealth, and cailnOt pdllibly increafe v/ith-
out

It is not the a6lual greatnefs of national wealthi but its con-
tinual increafe, which occafions a rife in the wag^s of labour.
It is not, accordingly, in the richeft countries, but in the moft
thriving or in thofe which are growing rich the faftdft, that the
wages of labour are higheft'. England is certainly, ih the prefent
times, a much richer country than any part of North America.
The wages of labour, however, are much higher in North America
than in any part of England. In the province of New York,
common labourers earn three fliillings and fixpence currency,
equal to two Ihillings fterling, a day; fhip carpenters, ten fhillings
and fixpence currency, with a pint of rurti worth fixpence fterling,
equal in all to fix fhillings and fixpence fterling ; houle carpenters
and bricklayers, eight fhillings currency, equal to four fliillings
and fixpence fterling; journeymen taylors, five fhillings currency,
equal to about two fhillings and ten-pence fterling. Thefe prices
are all above the London price; and wages are faid to be as high
in the other colonies as in New York. The price of provifions is
every where in North America much lower than in England. A
dearth has never been known there. In the worft feafons, they
Vol. I. M 3 have

86 THE NATURE AND CAUSES OF

B O^O K have always had a fufficiency for themfelves, though lefs for expor-
u— y"-o tation. If the money price of labour, therefore, be higher than
it is any where in the mother country, its real price, the real com-
mand of the necelTaries and conveniencies of life which it conveys
to the labourer, muft be higher in a ftill greater proportion.

But though North America is not yet fo rich as England, it is
much more thriving, and advancing with much greater rapidity to
the further acquifition of riches. The moft decifive mark of the
profperity of any country is the increafe of the number of its
inhabitants. In Great Britain and moft other European countries
they are not fuppofed to double in lefs than five hundred years.
In the Britifli colonies in North America, it has been found, that
they double in twenty or five and twenty years. Nor in the
prefent times is this increafe principally owing to the continual
importation of new inhabitants, but to the great multiplication of
the fpecies. Thofe who live to old age, it is faid, frequently fee
there from fifty to a hundred, and fometimes many more, defcend-
ants from their own body. Labour is there fo well rewarded that
a numerous, family of children, inftead of being a burthen, is" a
fource of opulence and profperity to the parents. The labour of
each child, before it can leave their houfe, is computed to be worth
' . a hundred pounds clear gain to them. A young widow with four or
five young children, who, among the middling or inferior ranks of
people in Europe, v/ould have fo little chance for a fecond hufband,
is there frequently courted as a fort of fortune. The value of
children is the greateft of all encouragements to mai'riage. We
cannot, therefore, wonder that the people in North America fhould
generally marry very young. Notwithftanding the great increafe
occafioned by fuch early marriages, there is a continual complaint
of the fcarcity of hands in North America. The demand far
labourers, the funds deitined for maintaining them, increafe, it
feems, flill fafVer than they can find labourers to- employ.

.. Though

THE WEALTH OF NATIONS.

Though the wealth of a country ftiould be very great, yet ^ yj^j^*
if it- has been long ftationary, we muft not expe6l to find the u— v— *
wages of labour very high in it. The funds deftined for the pay-
ment of wages, the revenue and ftock of its inhabitants, may be
of the greateft extent, but if they have continued for feveral cen-
turies of the fame, or very nearly of the fame extent, the number of
labourers employed every year could eafily fupply, and even more
than fupply, the number wanted the following year. There could
feldom be any fcarcity of hands, nor could the mafters be obliged
to bid againft one another in order to get them. The hands, on
the contrary, would, in this cafe, naturally multiply beyond their
employment. There would be a conftant fcarcity of employmenti.
and the labourers would be obliged to bid againft one another in
order to get it. If in fuch a country the wages of labour had ever
been more than fufficient to maintain the labourer and to enable him
to bring up a family, the competition of the labourers and the
intereft of the mafters would foon reduce them to this loweft r^te
which is. confiftent with common humanity, China has been long
one of the richeft, that is,, one of the moft fertile, beft cultivated,
moft induftrious and moft populous countries in the world. It feems,
however, to have been long ftationary. Marco Polo, who vifited it
more than five hundred years ago, defcrlbes its cultivation, induftrjr
and populoufnefs almoft in the fame terms in which they are de-
fcribedby travellers in the prefent times. It had perhaps even long
b.efore his time acquired that full complement of riches which the
nature of its laws and inftitutions permits it. to- acquire. The
accounts of all travellers, inconfiftent in many other refpe6ls, agree
ih the low wages of labour, and. in the difficulty, which a labourer
finds in bringing up a family in China. If by digging the ground a
whole day he can get what will purchafe a fmall quantity of rice, in
the evening, he is contented. The condition of artificers is, if
pofiible, itill worfe. Inftead. of waiting indolently in their work-

houfes,,

•88 THE NATURE AND CAUSES OF

B O^O K houfes, for the calls of their cuftomers, as in Europe, they are
— continually running about the ftreets with the tools of their
refpeclive trades, offering their fervice, and as it were begging
employment. The poverty of the lower ranks of people in China
far furpaffes that of the moft beggarly nations in Europe. In the
neighbourhood of Canton many hundred, it is commonly faid,
many thoufand families have no habitation on the land, but live
conftantly in little fiftiing boats upon the rivers and canals. The
fubfiftence which they find there is fo fcanty that they are eager
to fifh up the naftieft garbage thrown overboard from any European
fhip. Any carrion, the carcafe of a dead dog or cat, for example,
though half putrid and (linking, is as welcome to them as the
moft wholefome food to the people of other countries. Marriage
is encouraged in China, not by the profitablenefs of children, but
by the liberty of deftroying them. In all great towns feveral are
every night expofed in the ftreet or drowned like puppies in the
water. The performance of this horrid office is even faid to be the
avowed bufmefs by which fome people earn their fubfiftence.

China, however, though it may perhaps ftand ftill, does not
feem to go backwards. Its towns are nowhere deferted by their
inhabitants. The lands which had once been cultivated are no-
where negle6led. The fanie or very nearly the fame annual labour
muft therefore continue to be performed, and the funds deftined
for maintaining it muft not, confequently, be fenfibly diminifhed. .
The loweft clafs of labourers, therefore, notwithftanding their
fcanty fubfiftence, muft fome way or another make ftiift to continue
their race fo far as to keep up their ufual numbers.

But it would be otherwife in a country where the funds deftined
for the maintenance of labour were fenfibly decaying. Every year
the demand for fervaiits and labourers would, in all the different

clafles

THE WEALTH OF NATIONS. «9

clafTes of employments, be lefs than it had been the year before, ^yjjj^'
Many who had been bred in the fuperior claffes, not being able to *-^-v —
find employment in their own bufmefs, would be glad to feek it in the
loweft. The loweft clafs being not only overftocked with its own
workmen, but with the overflowings of all the other clafies, the
competition for employment would be fo great in it, as to reduce
the wages of labour to the moft miferable and fcanty fubfiftence of
the labourer. Many would not be able to find employment even
upon thefe hard terms, but would either ftarve, or be driven to
feek a fubfiftence either by begging, or by the perpetration perhaps
of the greateft enormities. Want, famine, and mortality would
immediately prevail in that clafs, and from thence extend themfelves
to all the fuperior clafies, till the number of inhabitants in the
country was reduced to what could eafily be maintained by the
revenue and flock which remained in it, and which had efcaped
either the tyranny or calamity which had deftroyed the reft. This
perhaps is nearly the prefent ftate of Bengal, and of fome other of
the Englifti fettlements in the Eaft Indies. In a fertile country
which had before been much depopulated, where fubfiftence, con-
fequently, ftiould not be very difficult, and where, notwithftanding,
three or four hundred thoufand people die of hunger in one year, we
may be aflured that the funds deftined for the maintenance of the
labouring poor are faft decaying. The difference between the
genius of the Britifti conftitution which prote6ls and governs
North America, and that of the mercantile company which opprefl^es
and domineers in the Eaft Indies, cannot perhaps be better illuf-
trated than by the different ftate of thofe countries.

The liberal reward of labour, therefore, as it is the neceflary
effe6l, fo it is the natural fymptom of increafing national wealth.
The fcanty maintenance of the labouring poor, on the other hand,
is the natural fymptom that things are at a ftand, and their ftar-
ving condition that they are going faft backwards.

Vol. I, N In

THE NATURE AND CAUSES OF

B O^O K In Great Britain the wages of labour feem, in the prefent times,
v^-^i* to be evidently more than what is precifely neceflaiy to enable the
labourer to bring up a family. In order to fatisfy ourfelves upon
this point it will not be neceflary to enter into any tedious or
doubtful calculation of what may be the loweft fum upon which
it is pofTible to do this. There are many plain fymptoms that the
wages of labour are nowhere in this country regulated by this
loweft rate which is confiftent with common humanity.

First, in almoft every part of Great Britain there is a dif-
tin6lion, even in the loweft fpecies of labour, between fummer
and winter wages. Summer wages are always higheft. But on
account of the extraordinary expcnce of fewel, the maintenance of
a family is moft expenfive in winter. Wages, therefore, being
higheft when this expence is loweft, it feems evident that they arc
not regulated by what is necefiary for this expence; but by the quan-
tity and fuppofed value of the work. A labourer, it may be faid
indeed, ought to fave part of his fummer wages in order to defray
his winter expence ; and that through the whole year they do nof
exceed what is neceflary to maintain his family through the whole
year. A flave, however, or one abfolutely dependent on us for
immediate fubfiftence, would not be treated in this manner. His
daily fubfiftence would be proportioned to his daily neceflities.

Secondly, the wages of labour do not in Great Britain fluc-
tuate with the price of provifions. Thefe vary everywhere from
year to year, frequently from month to month. But in many
places the money price of labour rema^ins uniformly the fame
fometimes for half a century together. If in thefe places, there-
fore, the labouring poor can maintain their families in dear years,
they muft be at their eafe in times of modeiate plenty, and in
affluence in thofe of extraordinary cheapnefs. The high price of
provifions during thefe ten years paft has not in many parts of the

kingdom

THE WEALTH OF NATIONS.

kingdom been accompanied with any fenfible rife in the money ^^^^ ^*
price of labour. It has, indeed, in fome; owing probably more v^-v^-y
to the increafe of the demand for labour than to that of the price
of provifions.

Thirdly, as the price of provifions varies more from year to
year than the wages of labour, fo, on the^ other hand, the wages
of labour vary more from place to place than the price of pro-
vifions. The prices of bread and butcher's meat are generally
the fame or very nearly the fame through the greater part of the
united kingdom. Thefe and moft other things which are fold
by retail, the way in which the labouring poor buy all things, are
generally fully as cheap or cheaper in great towns than in the
remoter parts of the country, for reafons which I fiiall have oc-
cafion to explain hereafter. But the wages of labour in a great
town and its neighbourhood are frequently a fourth or a fifth part,
twenty or five and twenty per cent higher than at a few miles
diftance. Eighteen pence a day may be reckoned the common
price of labour in London and its neighbourhood. At a few miles
diftance it falls to fourteen and fifteen pence. Ten-pence may
be reckoned its price in Edinburgh and its neighbourhood. At
a few miles diftance it falls to eight pence, the ufual price of com-
mon labour through the greater part of the low country of Scot-
land, where it varies a good deal lefs than in England. Such a
difference of prices, which it feems is not always fufficient' to
tranfport a man from one parifli to another, would neceflarily oc-
cafion fo great a tranfportation of the moft bulky commodities,
not only from one parifli to another, but from one end of the
kingdom, almoft from one end of the world to the other, as would
foon reduce them more nearly to a level. After all that has been'
faid of the levity and inconftancy of human nature, it appears evi-
dently from experience that a man is of all forts of luggage the moft'

N 2 difficult

THE NATURE AND CAUSES OF

^ difficult to be tranfported. If the labouring poor, therefore, can
maintain their families in thofe parts of the kingdom where the price
of labour is loweft, they muft be in affluence where it is higheft.

Fourthly, the variations in the price of labour not only-
do not correfpond either in place or time with thofe in the price
of provifions, but they are frequently quite oppofite.

Grain, the food of the common people, is dearer in Scotland
than in England, whence Scotland receives almoft every year very
large fupplies. But Englifii corn muft be fold dearer in Scotland, the
country to which it is brought, than in England, the country from
which it comes ; and in proportion to its quality it cannot be fold
dearer in Scotland than the Scotch corn that comes to the fame
market in competition with it. The quality of grain depends chiefly
upon the quantity of flour or meal which it yields at the mill, and
in this refpe6l Englifli grain is fo much fuperior to the Scotch that,
though often dearer in appearance, or in proportion to the mea-
fure of its bulk, it is generally cheaper in reality or in proportion
to its quality, or even to the meafure of its weight. The price
of labour, on the contrary, is dearer in England than in Scotland..
If the labouring poor, therefore, can maintain their families ia
the one part of the united kingdom, they muft be in affluence
in the other. Oatmeal indeed fupplies the common people in
Scotland with the greateft and the beft part of their food, which
is in general much inferior to that of their neighbours of the
fame rank in England. This difference, however, in the mode
of their fubfiftence is not the caufe, but the eff*e6t of the difference
in their wages though, by a ftrange mifapprehenfion, I have fre-
quently heard it reprefented as the caufe. It is not becaufe one
man keeps a coach while his neighbour walks a-foot, that the
A one

THE WEALTH OF NATIONS. 9

one IS rich and the other poor ; but becaufe the one is rich he C H^A P.
keeps a coach, and becaufe the other is poor he walks a-foot. u -y—

During the courfe of the laft century, taking one year with
another, grain was dearer in both parts of the united kingdom
than during that of the prefent. This is a matter of fa6l whicli-
cannot now admit of any reafonable doubt ; and the proof of
it is, if poffible, ftill more decifive with regard to Scotland than
with regard to- England. It is in Scotland fupported by the evi-
dence of the publick fiars, annual valuations made upon oath,
according to the a6lual ftate of the markets, of all the. different
forts of grain in every different county of Scotland. If fuch
direft proof could require any collateral evidence to confirm it,
I would obferve that this has likevvife been the cafe in France, and
probably in moft other parts of Europe. With regard to France
there is the clearefl proof. But though it is certain that in both
parts of the united kingdom grain was fomewhat dearer in the lafl
century than in the prefent, it is equally certain that labour was>
much cheaper. If the labouring poor, therefore, could bring up
their families then, they mufl be much more at their eafe now.
In the laft century, the moft ufual day-wages of common labour
through the greater part of Scotland were fixpence in fummer
and five-pence in winter. Three fliillings a week, the fame price
very nearly, ftill continues to be paid in fome parts of tlie High-
lands and weftern Iflands. Through the greater part of the low^
country the moft ufual wages of common labour are now eight-
pence a dayi ten-pence, fometimes a ftiilUng about Edinburgh, in
the counties which border upon England, probably on account
of that neighbourhood, and in a few other places where there
has lately been a confiderable rife in the demand for labour, about
Glafgow, Carron, Ayr-ftiire, &c. In England the improvements
of agriculture, manufactures and commerce began much earlier

than

THE NATURE AND CAUSES OF

B O^O K than in Scotland. The demand for labour, and confequently its price,
V— mail: neceflarily have increafed with thofe improvements. In the laft
century, accordingly, as well as in the prefent, the wages of labour
were higher in England than in Scotland. They have rifen too
confiderably fince that time, though on account of the greater
variety of wages paid there in different places, it is more difficult
to afcertain how much. In 1614, the pay of a foot foldier was
the fame as in the prefent times, eight pence a day. When it
was firft eftabliflied it would naturally be regulated by the ufual
wages of common labourers, the rank of people from which foot
foldiers are commonly drawn. Lord Chief Juftice Hales, who
wrote in the time of Charles II. computes the neceffary expence
•of a labourer's family, confifting of fix perfons, the father and
mother, two children able to do fomething, and two not able, at
ten fliillings a week, or twenty-fix pounds a year. If they can-
not earn this by their labour, they muft make it up, he fuppofes,
■either by begging or ftealing. He appears to have enquired very
carefully into this fubje61:. Jn 1688, Mr. Gregory King, whofe
ikill in political arithmetick is fo much extolled by Do6lor Dave-
nant, computed the ordinary income of labourers and out-fervants
to be fifteen pounds a year to a family, which he fuppofed to
confift, one with another, of three and a half perfons. His cal-
culation, therefore, though different in appearance, correfponds
very nearly at bottom with that of judge Hales. Both fuppofe
the weekly expence of fuch famiUes to be about twenty-pence a
head. Both the pecuniary income and expence of fuch families
have increafed confiderably fince that time through the greater
part of the kingdom j in fome places more, and in fome lefs ;
though perhaps fcarce any where fo much as fome exaggerated
accounts of the prefent wages of labour have lately reprefented
them to the publick. The price of labour, it muft be obferved,
cannot be afcertained very accurately anywhere, different prices

being

THE WEALTH OF NATIONS.

being often paid at the fame place and foi» the fame fort of labour, C H a r.
not only according to the different abilities of the workmen, but u-"v-^
according to the eafinefs or hardnefs of the mailers. Wheie
wages are not regulated by law, all that we can pretend to deter-
mine is what are the moil ufual ; and experience feems to fliow
that law can never regulate them properly, though it has often
pretended to do fo.

The real recompence of labour, the real quantity of the ne-
ceffaries and conveniencies of life which it can procure to the
labourer, has, during the courfe of the prefent century, increafed
peihaps in a ftill greater proportion than its money price. Not
only grain has become fomewhat cheaper, but many other things
from which the induftrious poor derive an agreeable and whole-
fbme variety of food, have become a great deal cheaper. Potatoes,,
for example, do not at prefent, through the greater part of the
kingdom,, coft half the price which they ufed tO" do thirty or
forty years ago. The fame thing may be faid of turnips, carrots,,
cabbages J things which, were formerly never raifed but by the
fpade, but which are now commonly raifed by the plough. All:
fort of garden fluff too has become cheaper. The greater part
of the apples and even of the onions confumed, in Great Britain:
were in the laft century imported from Flanders.. The great im-
provements in the coarfer manufaflur^s of both linen and woollen
cloth furnifh the labourers with cheaper and better cloathing j;
and' thofe in the manufactures of the coarfer metals, with cheaper
and better inftruments of trade, as well; as witli many agreeable
and convenient pieces of houfehold furniture. Soap, fait, can-
dles, leather, and fermented liquors have, indeed, become a good;
deal dearer; chiefly from the taxes . which have been laid upon;
them. The quantity of thefe however which the labouring
poor are under any necefTity of confuming, is fo very fmall. that:

the

THE NATURE AND CAUSES OF

B O^O K the increafe in their price does not compenfate the diminutvon in
t — V — that of fo many other things. The common complaint that
luxury extends itfelf even to the loweft ranks of the people, and
that the labouring poor will not now be contented with the fame
food, cloathing and lodging which fatisfied them in former times,
may convince us that it is not the money price of labour only,
but its real recompence which has augmented.

Is this improvement in the circumftances of the lower ranks of
the people to be regarded as an advantage or as an inconveniency
to the fociety ? The anfwer feems at firft fight abundantly plain.
Servants, labourers and workmen of different kinds, make up
the far greater part of every great political fociety. But what
improves the circumftances of the greater part can never be re-
garded as an inconveniency to the whole. No fociety can furely
be flourifhing and happy, of which the far greater part of the
members are poor and miferable. It is but equity, befides, that
they who feed, cloath and lodge the whole body of the people,
fhould have fuch a fhare of the produce of their own labour as
to be themfelves tolerably well fed, cloathed and lodged.

Poverty, though it no doubt difcourages, does not always
prevent marriage. It feems even to be favourable to generation.
A half ftarved Highland woman frequently bears more tlian
twenty children, while a pampered fine lady is often incapable of
bearing any, and is generally exhaufted by two or three. Bar-
rennefs, fo frequent among women of fafliion, is very rare among
thofe of inferior ftation. Luxury in the fair fex, while it enflames
perhaps the palTion for enjoyment, feems always to weaken 'and
frequently to deftroy altogether the powers of generation.

But

THE WEALTH OF NATIONS.

But poverty, though it does not prevent the generation, is ^yjjj'^*
extreamly unfavourable to the rearing of children. The tender -y-^
plant is produced, but in fo cold a foil and fo fevere a climate, foon
withers and dies. It is not uncommon, I have been frequently
told, in the Highlands of Scotland for a mother who has borne
twenty children not to have two alive. Several officers of great
experience hav^ affured me that fo far from recruiting their regi-
ment, they have never been able to fupply it with drums and fifes
from all the foldiers children that were born in it. A greater
number of fine children, however, is feldom feen anywhere than
about a barrack of foldiers. Very few of them, it feems, arrive
at the age of thirteen or fourteen. In fome places one half the
children born die before they are four years of age; in many
places before they are feven ; and in almoft all places before they
are nine or ten. This great mortality, however, will every where
be found chiefly among the children of the common people, who
cannot afford to tend them with the fame care as thofe of better
ftation. Though their marriages are generally more fruitful than
thofe of people of fafliion, a fmaller proportion of their children
arrive at maturity. In foundling hofpitals, and among the children
brought up by parifti charities the mortality is ftill greater than
among thofe of the common people.

Every fpecies of animals naturally multiplies in proportion
to the means of their fubfiflence, and no fpecies can ever mul-
tiply beyond it. But in civilized fociety it is only among the
inferior ranks of people that the fcantinefs of fubfiftence can fet
limits to the further multiplication of the human fpecies i and it
can do fo in no other way than by deftroying a great part of the
children which their fruitful marriages produce.

The liberal reward of labour, by enabling them to provide better
for their children, and confequently to bring up a greater number.
Vol. I. O naturally

9^ , THE NATURE AND CAUSES OF

BOOK naturally tends to widen and extend thofe limits. It deferves
v'-- J to be remarked too, that it necefiarily does this as nearly as pof-
fible in the proportion which the demand for labour requires.
If this demand is continually increafmg, the reward of labour
muft neceffarily encourage in fuch a manner the marriage and
multiplication of labourers, as may enable them to fupply that
continually increafmg demand by a continually increafmg popu-
lation. If it fhould at any time be lefs than what was requifite
for this purpofe, the deficiency of hands would foon raife it j
and if it fhould at any time be more, their exceffive multiplication
would foon lower it to this neceffary rate. The market would
be fo much underftocked with labour in the one cafe, and fo
much overftocked in the other, as would foon force back its price
to that proper rate which the circumflances of the fociety required.
It is in this manner that the demand for men, hke that for any
other commodity, necefiarily regulates the production of men ;
quickens it when it goes on too fiowly, and flops it when it
advances too fafi:. It is this demand which regulates and deter-
mines the fiatc of propagation in all the diff'erent countries of
the world, in North America, in Europe, and in China ; which
renders it rapidly progrefilve in the firfi:, flow and gradual in the
fecond, and altogether ftationary in the lafi".

The tear and wear of a flave, it has been faid, is at theexpence
of his mafi:er; but that of a free fervant is at his own expence.
The tear and wear of the latter, however, is, in reality, as much
at the expence of his mafirer as that of the former. The wages
paid to journeymen and fervants of every kind mufi: be fuch as
may enable them, one with another, to continue the race of journey-
men and fervants, according as the increafing, diminifiiing, or
ftationary demand of the fociety may happen to require. But
though the tear and wear o^ a free fervant be equally at the expence

THE WEALTH OF NATIONS.

of his maftcr, it generally cofls him much lefs than that of a ^y^^j^*
flave. The fund deftined for replacing or repairing, if 1 may fay s- — ^ — j
fo, the tear and wear of the flave, is commonly managed by a
negligent mafter or carelefs overfeer. That deftined for perform-
ing the fame office with regard to the free man, is managed by the
free man himfelf. The diforders which generally prevail in the
oeconomy of the rich, natuially introduce themfelves into the
management of the former : The ftri6t frugahty and parfimonious
attention of the poor as naturally eftabliOi themfelves in that
of the latter. Under fuch different management, the fame pur-
pofe muft require very different degrees of expence to execute it.
Jt appears, accordingly, from the expei ience of all ages and na-
tions, I believe, that the work done by freemen comes cheaper
in the- 'end than that performed by flaves. It is found to do fo
even at Bofton, New York, and Philadelphia, where the wages
of common labour are fo very high.

The liberal reward of labour, therefore, as it is the effe6l of
increafmg wealth, fo it is the caufe of increafmg population. To
complain of it is to lament over the neceifary effe6l and caufe of
the greateft publick profperity.

It deferves to be remarked, perhaps, that it is in the progrefTive
ftate, while the fociety is advancing to the further acquifition,
rather than when it has acquired its full complement of riches, that
the condition of the labouring poor, of the great body of the peo-
ple, feems to be the happiefl and the moil comfortable. It is hard
in the flationary, and miferable in the declining flate. The pro-
greffive flate is in reality the chearful and the hearty flate to all
the different orders of the fociety. The ilationary is dull; the
declining, melancholy.

The

lOO

THE NATURE AND CAUSES OF

B O^O K The liberal reward of labour, as it encourages the propagation,
J fo it increafes the induftry of the common people. The wages of
labour are the encouragement of induftry, which, like every other
human quality, improves in proportion to the encouragement it
receives. A plentiful fubfiftence increafes the bodily ftrength of
the labourer, and the comfortable hope of bettering his condition,
and of ending his days perhaps in eafe and plenty, animates him to
exert that ftrength to the utmoft. Where wages are high, ac-
cordingly, we fhall always find the workmen more a6Vive, diligent,
and expeditious, than where they are low; in England, for ex:-
ample, than in Scotland; in the neighbourhood of great towns,
than in remote country places. Some workmen, indeed, when
they can earn in four days what will maintain them through the
week, will be idle the other three. This, however, is by no
means the cafe with the greater part. Workmen, on the contrary,
when they are liberally paid by the piece, are very apt to over-wor4i
themfelves, and to ruin their health and conftitution in a few
years. A carpenter in London, and in fome other places, is not
fuppofed to laft in his utmoft vigour above eight years. Some-
thing of the fame kind happens in many other trades, in which tlie
workmen are paid by the piece ; as they generally are in manu-
faflures, and even in country labour, wherever wages are higher
than ordinary. Almoft every clafs of artificers is fubjefl to . fome
peculiar infirmity occafioned by exceffive application to their pe-
culiar fpecies of work. Ramuzzini, an eminent Italian phyfician,
has written a particular book concerning fuch difeafes. We do not
reckon our foldiers the moft induftrious fet of people among us.
Yet when foldiers have been employed in fome particular forts of
work, and liberally paid by the piece, their officers have frequently
been obliged to ftipulate with the undertaker, that they fliould not
be allowed to earn above a certain fum every day, according to the
rate at which they were paid. Till this ftipulation was made,
4 mutual

THE WEALTH OF NATIONS;

loi

imitual emulation and the defire of greater gain, frequently prompt- C H^A P.
ed them to over-work themfelves, and to hurt their health by
exceflive labour. Exceflive application during four days of the
week, is frequently the real caufe of the idlenefs of the other
three, fo much and fo loudly complained of. Great labour, either
of mind or body, continued for feveral days together, is in moft
men naturally followed by a great defue of relaxation, which, if
not reftrained by force or by fome ftrong neceffity, is almoft ir-
refiftable. It is the call of nature, which requires to be relieved by
fome indulgence, fometimes of eafe only, but fomxCtimes too of
dilTipation and diverfion. If it is not complied with, the confe-
quences are often dangerous, and fometimes fatal, and fuch as
almoft always, fooner or later,, bring on the peculiar infirmity of
the trade. If mafters would always liften to the divftates of reafon
and humanity, they, have frequently occafion rather to moderate,
than to animate the application of many of their v/orkmen. It will
fee found, I believe, in every fort of trade, that the man who works
fo moderately, as to be able to work conftantly, not only preferves
his health the longeft, but, in the courfe of the year, executes the
greateft quantity of work.

I'm cheap years, it is pretended, workmen are generally more
idle, and in dear ones more induftrious than ordinary. A plen-
tiful fubfiftence, therefore, it has been concluded, relaxes, and a
fcanty one quickens their induftry. That a little more plenty
than ordinary may render fome workmen idle, cannot well be
doubted J but that it fliould have this efFe61: upon the greater part,
or that men in general fhould work better when they are ill fed
than when they are well fed, when they are diftieartened than when
they are in good fpirits, when they are frequently fick than when
they are generally in good health, feems not very probable. Years
of dearth, it is to be obferved, are generally among the common

people

102

THE NATURE AND CAUSES OF

B O^O K people years of ficknefs and mortality, which cannot fail to dimi-
V— — >r— nifli the produce of their induftry.

In years of plenty, fervants frequently leave their maftcrs, and
truft their fubfiftence to what they can make by their own induftry.
But the fame cheapnefs of provifions, by increafing the fund which
is deftined for the maintenance of fervants, encourages mailers,
farmers efpecially, to employ a greater number. Farmers upon
fuch occafions expe6t more profit from their corn by maintaining
a few more labouring fervants, than by felling it at a low price in
the market. The demand for fervants increafes, while the number
of thofe who offer to fupply that demand diminifhes. The price
of labour, therefore, frequently rifes in cheap years.

In years of fcarcity, the difficulty and uncertainty of fubfiftence
make all fuch people eager to return to fervice. But the high price of
provifions, by diminifliing the funds deftined for the maintenance
of fervants, difpofes mafters rather to diminifh than to increafe the
number of thofe they have. In dear years too, poor independant
workmen frequently confume the little flocks with which they had
ufed to fupply themfelves with the materials of their work, and are
obliged to become journeymen for fubfiflence. More people want
employment than can eafily get itj many are willing to take it
upon lower terms than ordinary, and the wages of both fervants
and journeymen frequently fink in dear years.

Masters of all forts, therefore, frequently make better bar-
gains with their fervants in dear than in cheap years, and find
them more humble and dependant in the former than in the latter.
They naturally, therefore, commend the former as more favourable
to induflry. Landlords and farmers, befides, two of the largefl
clafTes of rnaflers, have another reafon for being plcafed with dear
7 vp-^xs.

r THE WEALTH OF NATIONS. lo;

years. The rents of the one and the profits of the other depend ^yjjj^*
very much upon the price of provifions. Nothing can be more v.^"v-— J
abfurd, however, than to imagine that men in general fhould
work lefs when they work for themfelves, than when they work
for other people. A poor independant workman will generally
be more induftrious than even a journeyman who works by the
piece. The one enjoys the whole produce of his own induftry; the
other fhares it with his mafter. The one, in his feparate, inde-
pendant ftate, is lefs liable to the temptations of bad company,
which in large manufa6tories fo frequently ruin the morals of the-
other. The fuperiority of the independant workman over thofe
fervants who are hired by the month or by the year, and whofe
wages and maintSlmnce are the fame whether they do much or
do little, is likely to be ftill greater. Cheap years tend to inereafe
the proportion of independant workmen to journeymen and fer-
vants of all kinds, and dear years to diminifh it.

A French author of great knowledge and ingenuity,. Mr.^
MelTance, receiver of the tailles in the election of St. Etienne,,
endeavours to fhow that the poor do more work in cheap than in
dear years, by comparing the quantity and value of the goods made
upon thofe different occafions in three different manufa6lures; one
of coarfe woollens carried on at Elbeufj one of linen, and another of
filk, both which extend through the whole generality of Rouen.
It appears from his account, which is copied from the regifters of
the publick offices, that the "quantity and value of the goods
made in all thofe three maiiufaftures has generally been greater
in cheap than in dear years ; and that it has always been greatefl
in the cheapeft, and leafl in the dearefl years. All the three feem.
to be ftationary manufa6lures, or which, though their produce
may vary fomewhat from year to year, are upon tlie whole neir-
ther going backwards nor forwards*

The

104.

THE NATURE AND CAUSES OF

BOOK The manufa6lure of linen in Scotland, and that of coarfe wool-
I.

u— v-^ lens in the weft riding of Yoikfhire, are growing manufadlures,
of which the produce is generally, though with fome variations,
increafing hoth in quantity and value. Upon examining, how-
ever, the accounts which have been publifhed of their annual pro-
duce, I have not been able to obferve that its variations have had
any fenfible conne6tion with the dearnefs or cheapnefs of the fea-
fons. In 1740, a year of great fcarcity, both manufad:ures, in-
deed, appear to have declined very conhderably. But in 1756,
another year of great fcarcity, the Scotch manufacture made more
than ordinary advances. The Yorkfhire manufacture, indeed,
declined, and its produce did not rife to what it had been in 1755
till 1766, after th^ repeal of the American ftamp a£l. In that and
the following year it greatly exceeded what it had ever been before,
and it has continued to do fo ever fmce.

The produce of all great manufactures for diftant fale muft ne,-
celTarily depend, not fo much upon the dearnefs or cheapnefs of
the feafons in the countries where they are carried on, as upon the
circumftances which affeCt the demand in the countries where they
are confumed; upon peace or war, upon the prolperity or de-
clenfion of other rival manufactures, and upon the good or bad
humour of their principal cuftomers. A great part of the extra-
ordinary work, befides, which is probably done in cheap years, never
enters the publick regifters 'of manufactures. The men-fervants
who leave their mafters become independant labourers. The wo-
men return to their parents, and commonly fpin in order to make
cloaths for themfelves and their famiHes. Even the independant
workmen do not always work . for publick fale, but are employed
by fome of their neighbours in manufactures for family ufe. The
produce of their labour, therefore, frequently makes no figure in
thofe publick regifters of which the records are fometimes pub-

iiftied

THE WEALTH OF NATIONS. 105

liflicd with fo much parade, and from which our merchants and ^yj^^*
manufacturers would often vainly pretend to anounce the profperity ^
or declenfion of the greateft empires.

Though the variations in the price of labour, not only do not
always correfpond with thofe in the price of provifions, but arc
frequently quite oppofite, we muft not, upon this account, ima-
gine that the price of provifions has no influence upon that of
labour. The money price of labour is neceffarily regulated by
two circumftances ; the demand for labour, and the price of the
neceflaries and conveniencies of life. The demand for labour,
according as it happens to be incrcafmg, flationary, or declining,
or to require an increafmg, flationary, or declining population,
determines the quantity of the neceflaries and conveniencies of life
which mufl: be given to the labourer; and the money price of
labour is determined by what is requiflte for purchaflng this quan-
tity. Though the money price of labour, therefore, is fometimes
high where the price of proviflons is low, it would be fliill higher,
the demand continuing the fame, if the price of proviflons was
high.

It is bccaufe the demand for labour increafes in years of fudden
and extraordinary plenty, and diminiflies in thofe of fudden and
extraordinary fcarcity, that the money price of labour fometimes
rifes in the one, and flnks in the other.

In a year of fudden and extraordinary plenty, there are funds
in the hands of many of the employers of induftry, fuflicient to
maintain and employ a greater number of indufl:rious people than,
had been employed the year before; and this extraordinary num-
ber cannot always be had. Thofe mafliers, therefore, who want
more workmen bid againfl: one another, in order to get them.

Vol. I. P which

io6

THE NATURE AND CAUSES OF

BOOK which fometimes raifes both the real and the money price of their
r — I labour.

The contrary of this happens in a year of fudden and extraordinary
fcarcity. The funds deftined for employing induftry are lefs than
they had been the year before. A confiderable number of people are
thrown out of employment, who bid againft one another in order to
get it, which fometimes lowers both the real and the money price of
labour. In 1740, a year of extraordinary fcarcity, many people were
wiUing to work for bare fubfiftence. In the fucceeding years of
plenty, it was more difficult to get labourers and fervants..

- The fcarcity of a dear year, by diminifhing the demand for la-
bour, tends to lower its price, as the high price of provifions,
tends to raife it. The plenty of a cheap year, on the contrary, by
increaling the demand, tends to raife the price of labour, as the
cheapnefs of provifions tends to lower it. In the ordinary varia-
tion? of the price of provifions, thofe two oppofite caufes feem to
counter-balance one another; which is probably in part the reafon.
why the wages of labour are every where fo much more fteady and.
permanent than the price of provifions.

The increafe in the wages of labour neceffarily increafes the
price of many commodities, by increafmg that part of it which
refolves itfelf into wages, and fo far tends to diminifh their con-
fumption both at home and abroad. The fame caufe, however,,
which raifes the wages of labour, the increafe of flock, tends to
increafe its produ61:ive power.s, and to make a fmaller quantity of
labour produce a greater quantity of work. The owner of the
flock which employs a great number of labourers, neceffarily en-r
deavours, for his own advantage, to make fuch a proper divifion
and diflribution of employment, that they may be enabled to pro-.

duce.:

THE WEALTH OF NATIONS.

duce the greatefl quantity of work poffible. For the fame reafon, CHAP,
he endeavours to fupply them with the beft machinery which either w,— y— ^
he or they can think of. What takes place among the labourers
in a particular workhoufe, takes place, for the fame reafon, among
thofe of a great fociety. The greater their number, the more they
naturally divide themfelves into different clafTes and fubdivifions of
employment. More heads are occupied in inventing the moft
proper machinery for executing the work of each, and it is, there^
fore, more likely to be invented. There are many commodities,
therefore, which, in confequence of thefe improvements, come
to be produced by fo much lefs labour than before, that the in-
creafe of its price does not compenfate the diminution of its quan-
tity.

P 2

THE NATURE AND CAUSES OF

C H A P. IX.

Of the Profits of Stock.

BOOK ' I ^HE rile and fall in the profits of flock depend upon the
Wyrw A fame caufes with the rife and fall in the wages of labour,,
the increafing or declining ftate of the wealth of the fociety; but
thofe caufes a£Fe6l the one and th^ other very differently..

The increafe of flock, which raifes wages, tends to lower
profit. When the flocks of many rich merchants are turned into
the fame trade, their mutual competition naturally tends to lower
its profit; and when there is a like increafe of flock in all the dif-
ferent trades carried on in the fame fociety, the fame competition,
mufl produce the fame effe£l in them all..

It is not eafy, it has already been obfcrved, to afcertain what
are the average wages of labour even in a particular place, and at
a particular time. We can, even in this cafe, feldom determine
more than what are the mofl ufual wages. But even this can
feldom be done with regard to the profits of flock. Profit is fo
very flu6luating, that the perfon who carries on a paiticular trade
cannot always tell you himfelf what is the average of his annual
profit. It is affected, not only by every variation of price in the
commodities which he deals in, but by the good or bad fortune
both of his rivals and of his cuflomers, and by a thoufand other

accidents

THE WEALTH OF NATIONS.

accidents to which goods when carried either by fea or by land, or C
even when ftored in a warehoufe, are liable. It varies, therefore,
not only from year to year, but from day to day, and almoft from
hour to hour. To afcertain what is the average profit of all the
different trades carried on in a great kingdom, mufl be much more
difficult } and to judge of what it may have been formerly, or in
remote periods of time, with any degree of precifion, muft be al-
together impofTible.

But though it may be impofTible to determine, with any degree*
of precifion, what are or were the average profits of flock, either
in the prefent, or in antient times, fome notion may be formed of
them from the interefl of money. It may be laid down as a
maxim, that wherever a great deal can be made by the ufe of
money, a great deal will commonly be given for the ufe of it y
and that wherever little can be . made by it, lefs will commonly be
given for it. According, therefore, as the ufual market rate of
interefl varies in any country, we may be afTured that the ordinary
profits of flock mufl vary with it, mufl fmk as it finks, and rife
as it rifes. The progrefs of interefl, therefore, may lead us to
form fome notion of the progrefs of profit.

By the 37th of Henry VIII, all interefl above ten per cent,
was declared unlawful. More, it feems, had fometimes been
taken before that. In the reign of Edward VL, religious zeal pro-
hibited all interefl. This prohibition, however, like all others of
the fame kind, is faid to have produced no efTe6l, and probably
rather increafed than diminifhed the evil of ufury. The flatute of
Henry VIII was revived by tlie 13th of Elizabeth cap. 8, and ten
per cent, continued to be the legal rate of interefl till the 21ft of
James I. when, it was reflricled to eight per cent. It was reduced:

to.

[lo THE NATURE AND CAUSES OF

B O^O K to fix per cent, foon after the reftoration, and by the 12th of
u— Queen Anne, to five per cent. All thefe different ftatutary regu-
lations feem to have been made with great propriety. They feem
to have followed and not to have gone before the rnarket rate of
intereft, or the rate at which people of good credit ufually borrowed.
Since the time of Queen Anne, five per cent, feems to have been
jather above than below the market rate. Before the late war,
the government borrowed at three per cent, i and people of good
credit in the capital, and in many other parts of the kingdom, at
three and a half, four, and four and a half per cent.

Since the time of Henry VIII, the wealth and revenue of the
country have been continually advancing, and, in the courfe of
■their progrefs, their pace feems rather to have been gradually acce-
lerated than retarded. They feem, not only to have been going
on, but to have been going on fafter and fafter. The wages of
labour have been continually increafing during the fame period,
and in the greater part of the different branches of trade and manu-
factures the profits of ilock have been diminifhing.

It generally requires a greater ftock to carry on any fort of
trade in a great town than in a country village. The great flocks
employed in every branch of trade, and the number of rich com-
petitors, generally reduce the rate of profit in the former below
what it is in the latter. But the wages of labour are generally
higher in a great town than in a country village. In a thriving
tov/n the people who have great flocks to empley, frequently can-
not get the number of workmen they want, and therefore bid
againfl one another in order to get as many as they can, which
raifes the wages of labour, and lowers the profits of flock. In the
remote parts of the country there is frequently not flock fufficient
to employ all the people, who therefore bid agaiiifl one another in

order

THE WEALTH OF NATIONS. tit

order to get employment, which lowers the wages of labour, ahd C HA P.
raifes the profits of flock.. -y— iJ

In Scotland, though the legal rate of intereft is the fame as in
England, the market rate is rather higher. People of the beft
credit there feldom borrow under five per cent. Even private
bankers in Edinburgh give four per cent, upon their promiflbry
notes, of which payment either in whole or in part may be de-
manded at pleafure. Private bankers in London give no intereft
for the money which is depofited with them. There are few trades
which cannot be carried on with a fmaller ftock in Scotland than
in England. The common rate of profit, therefore, muft be
fomewhat greater. The wages of labour, it has already been
obferved, are lower in Scotland than in England. The country
too is not only much poorer, but the fteps by which it advances to
a better condition, for it is evidently advancing, feem to be much
flower and more tardy.

The legal' rate of intereft in France lias not, during the courfs
of the prefent century, been always regulated by the market rate.
In 1720 intereft was reduced from the twentieth to the fiftieth
penny, or from five to two per cent. In 1724 it was raifed to the
thirtieth penny, or to 34. per cent. In 1725 it was again raifed
to the twentieth penny, or to five per cent. In 1766, during the
adminiftration-of Mr. Laverdy, it was reduced to the twenty-fifth
penny, or to four per cent. The Abbe Terray raifed it afterwards
to the old rate of five- per cent. The fuppofed purpofe of many of
thofe violent rcduftions of intereft was to prepare the way for
reducing that of the public debts ; a pui pofe which has fometimes
been executed. Fi'ance is perhaps in the prefent times not fo rich
axountry as England; and though the legal rate of intereft has

4. V ij^-

I 12

THE NATURE AND CAUSES OF

B O^O K \xi France frequently been lower than in England, the market
w—v'--^ rate has generally been higher ; for there, as in other countries,
they have feveral very fafc and eafy methods of evading the
law. The profits of trade, I have been alTured by Britiili mer-
chants who had traded in both countries, are higher in France
than in England ; and it is no doubt upon this account that many
Britifh fubjefts chufe rather to employ their capitals in a country
where trade is in difgrace, than In one where it is highly refpefled.
The wages of labour are lower in France than in England. When
you go from Scotland to England, the difference which you may
remark between the drefs and countenance of the common people
in the one country and in the other, fufficiently indicates the dif-
ference in their condition. The contraft is ftill greater when you
return from France. France, though no doubt a richer country
than Scotland, feems not to be going forward fo fafl. It is a
common and even a popular opinion in the country that it is going
backwards ; an opinion which, I apprehend, is ill founded even
with regard to France, but which nobody can pofTibly entertain
with regard to Scotland, who fees the country now and who faw
it twenty or thirty years ago.

The province of Holland, on the other hand, in proportion
to the extent of its territory and the number of its people, is a
richer country than England. The government there borrow at
two per cent, and private people of good credit at three. The
wages of labour are faid to be higher in Holland than in England ;
and the Dutch, it is well known, trade upon lower profits than
any people in Europe. The trade of Holland, it has been pre-
tended by fome people, is decaying, and it may perhaps be true
that fome particular branches of it are fo. But thefe fymptoms
feem to indicate fufficiently that there is no general decay. When
y profit

THE WEALTH OF NATIONS. 113

profit diminiflies, merchants are very apt to complain that trade CHAP,
decays; though the dimmution of profit is the natural effect of its
profperity, or of a greater flock being employed in it than before.
During the late war the Dutch gained the whole carrying trade of
France, of which they ftill retain a very large fliare. The great
property which they pofTefs both in the French and Englifh funds,
about forty millions, it is faid, in the latter; (in which I fufpecl,
however, there is a confiderable exaggeration), the great fums
which they lend to private people in countries where the rate of
intcreft is higher than in their own, are circumftances which no
doubt demonftrate the redundancy of their ftock, or that it has
increafed beyond what they can employ with tolerable profit in the
proper bufinefs of their own country: but they do not demonftrate
that that bufinefs has decreafed. As the capital of a private man,
though acquired by a particular trade, may increafe beyond what
he can employ in it, and yet that trade continue to increafe too;
fo may likewife the capital of a great nation.

In our North American and Weft Indian colonies, not only
the wages of labour, but the interefl of money, and confequently
the profits of flock are higher than in England. In the different
colonies both the legal and the market rate of interefl run from fix
to eight per cent. High wages of labour and high profits of flock,
however, are things, perhaps, which fcarce ever go together, except
in the peculiar circumflances of new colonies. A new colony
muft always for fome time be more underflocked in proportion to
the extent of its territory, and more underpeopled in proportion
to the extent of its flock, than the greater part of other countries.
They have more land than they have flock to cultivate. What
they have, therefore, is applied to the cultivation only of what is
mofl fertile and mofl favourably fituated, the lands near the fea
fliore, and along the banks of navigable rivers. Such land too is
frequently purchafed at a price below the value even of its natural

Vol. I. Q_ produce.

THE NATURE AND CAUSE3 OF

B O^O K produce. Stock employed in, the purchafe and improvement of
4y>"vr^ flich lands mufl yield a very large profit, and confequently afford
to pay a very large intereft. Its rapid accumulation in fo profitable
an employ ipent enables the planter to inereafe the number of his
hands fafter than he, cm find, them in a new fettlement. Thofe-
whom he can fijid^ therefor-e, are very liberally rewarded. As the
colony increafes, the profits of flock gradually diminifh.' When,
the moft fertile and befl fituated lands have been all occupied, lefs
profit can be made by the cultivation of what is inferior both in
foil. 4nd fituation, and lefs interefl can be afforded for the flock which
is^ lb employed, In the greater part of our colonies, accordingly,
both the legal and the market rate of interefl have been confider-
ably reduced during the courfe of the prefent century^ As riches,,
improvement, and population have increafed, interefl has declined.
The wages of labour do not fink with the profits of flock. The
demand for labour increafes with the increafe of flock whatever be
its profits j and after thefe are diminifhed, flock may not only
continue to increafe, but to increafe much fafler than before. It
is with induflrious nations who are advancing in the acquifition of
riches, as with induflrious individuals. A great flock, though
with fmall profits, generally increafes fafler than a fmall flock with
great profits. Money, fays the proverb, makes money. When
you have got a little, it is often eafy to get more. The great diffi-
culty i& to get that little. The conne6tion between the increafe of
' flock and that of induflry, or of the demand for ufeful labour,
has partly been explained already, but will be explained more fully
heieafter in treating of the accumulation of flock.

The acquifition of new territory, or of new branches of trade,
may fometimes raife the profits of flock, and with them the in-
terefl of money, even in a country which is fafl advancing in the
acquifition of riches. The flock of the country not being fufiicient
8 for

.THE WEALTH OF NATIONS

for the whole acceflion of bufinefs» which fuch acquifitions prefent ^^^^*
to the different people among whom it is divided, is applied to — /—J
thofe particular branches only which afford the greateft proiit.
Part of what had before been employed in other trades, is neceHa-
rily withdrawn from them, and turned into fome of the new and
more profitable ones. In all thofe old trades, therefore, the com-
petition comes to be lefs than before. The market comes to be
lefs fully fupplied with many different forts of goods. Their price
neceffarily rifes more or lefs, and yields a greater profit to thofe
who deal in them, who can, therefore, afford to borrow at a higher
intereft. For fome time after the conclufion of the late war, not
only private people of the beil credit, but fome of the greatefl com-
panies in London, commonly borrowed at five per cent, who before
that had not been ufed to pay more than four, and four and a
half per cent. The great acceflion both of territory and trade, by
our acquifitions in North America and the Weft Indies, will fuf-
ficiently account for this, without fuppofmg any diminution in
the capital ftock of the fociety. So great an accelTion of new
buiinefs to be carried on by the old flock, muft neceffarily have
diminifhed the quantity employed in a great number of particular
branches, in which the competition being lefs, the profits muft
have been greater. I fhall hereafter have occafion to mention
the reafons which difpofe me to believe that the capital ftock of
Great Britain was not diminifhed even by the enormous expence
of the late war.

The diminution of the capital ftock of the fociety, or of the
funds _deftined for the maintenance of induftry, however, as it
lowers the wages of labour, fo it raifes the profits of ftock, and
confequently the intereft of money. By the wages of labour being
lowered, the owners of what ftock remains in the fociety can
bring their goods cheaper to market than before, and lefs ft-ock

0^2 being

THE NATURE AND CAUSES OF

being employed in fupplying the market than before, they can
fell them dearer. Their goods coft them lefs, and they get more
for them. Their profits, therefore, being augmented at both ends,
can well afford a large intercft. The great fortunes fo fuddenly and
fo eafily acquired in Bengal and the other Britifh fettlements in the
Eaft Indies, may fatisfy us that as the wages of labour are very
low, fo the profits of flock are very high in thole ruined countries..
The interefl of money is proportionably fo. In Bengal, money
is frequently lent to the farmers at forty, fifty, and fixty per cent,
and the fucceeding crop is mortgaged for the payment. As the
profits which can afford fuch an intereft muft eat up almoft the
whole rent of the landlord, fo fuch enormous ufury mufl in its
turn eat up the greater part of thofe profits. Before the fall of
the Roman republick, a ufury of the fame kind feems to have
been common in the provinces, under the ruinous adminiftration
of their proconfuls. The virtuous Brutus lent money in Cyprus
at five and forty per cent, as we learn from the letters of Cicero.

In a country which had acquired that full complement of riches
which the nature of its foil and climate and its fituation with
refpe6l to other countries allowed it to acquire ; which could,
therefore, advance no further, and which was not going back-
wards, botli the wages of labour and the profits of flock would
probably be very low. In a country fully peopled in proportion
to what either its territory could maintain or its ftock employ,
the competition for employment would necelTarily be fo great as to
reduce the wages of labour to what was barely fufficient to keep up
the number of labourers, and, the country being already fully
peopled, that number could never be augmented. In a country
fully flocked in proportion to all the bufinefs it had to tranfafl,
as great a quantity of flock would be employed in every particular
branch as the nature and extent of the trade would admit. The
7 competition.

THE WEALTH OF NATIONS.

117

competition, therefore, would everywhere be as great, and con-
fequently the ordinary profit as low as poflible. c--v^

But perhaps no country has ever yet arrived at this degree of
opulence. China feems to have been long ftationary, and had
probably long ago acquired that full complement of riches which
is confiftent with the nature of its laws and inftitutions. But
this complement may be much inferior to what, with other laws
and inftitutions, the nature of its foil, climate, and fituation might
admit of. A country which negle6ls or defpifes foreign commerce,
and which admits the velTels of foreign nations into one or two-
of its ports only, cannot tranfa6l the fame quantity of bufinefs
which it might do with different laws and inftitutions. In a
country too, where, though the rich or the owners of large capitals
enjoy a good deal of fecurity, the poor or the owners of fmall
capitals enjoy fcarce any, but are liable, under the pretence of
fuftice, to be pillaged and plundered at any time by the inferior
mandarines, the quantity of ftock employed in all the different
branches of bufinefs tranfa6led within it, can never be equal to
what the nature and extent of that bufinefs might admit. In every
different branch, the opprefTion of the poor muft eftablifh the
monopoly of the rich, who, by engrofling the whole trade to them-
felves, will be able to make very large profits. Twelve per cent,
accordingly is faid to be the common intereft of money in China,
and the ordinary profits of ftock muft be fufficient to afford this
large intereft.

A DEFECT in the law may fometimes raife the rate of intereft
confiderably above what the condition of the country, as to
wealth or poverty, would require. When the law does not enforce
the performance of contrafts, it puts all borrowers nearly upon
the fame footing with bankrupts or people of doubtful credit in

better

THE NATURE AND CAUSES OF

B O^O K better regulated countries. The uncertainty of recovering his money ^
V— makes the lender exa6t the fame ufurious intereft which is ufually
required from bankrupts. Among the barbarous nations who over-
run the weftern provinces of the Roman empire, the performance
of contracts was left for many ages to the faith of the contra6ting
parties. The courts of juftice of their kings feldom intermeddled
in it. The high rate of intereft which took place in thofe
antient times may perhaps be partly accounted for from this
;caufe.

When the law prohibits intereft altogether, it does not prevent
it. Many people muft borrow, and nobody will lend without
fuch a confideration for the ufe of their money as is fuitable, not
only to what can be made by the ufe of it, but to the difficulty
and danger of evadhig the law. The high rate of intereft among
-all Mahometan nations is accounted for by Mr. Montefquieu, not
from their poverty, but partly from this, and partly from the dif-
iiculty of recovering the money.

The loweft ordinary rate of profit muft always be fomething
more than what is fafficient to compenfate the occafional lofles to
which every employment of ftock is expofed.. It is this furplus
only wbich is neat or clear profit. What is called grofs pro-
fit comprehends frequently, not only this furplus, but what is
retained for compenfating fuch extraordinary loffes. The intereft
which the borrower can afford to pay is in proportion to the clear
jprofit only.

The loweft ordinary rate of intereft muft, in the fame manner,
be fomething more than fufficient to compenfate the occafional
loffes to which lending, even with tolerable prudence, is expofed.
Were it not more, charity or friend ftiip could be the only motives
for lending.

THE WEALTH OF NATIONS. 119

Tn a country which had acquired its full complement of riches, C P.
where in every particular branch of bufinefs there was the greateft t —
quantity of flock that could be employed in it, as the ordinary
rate of clear profit would be very fmall, fo the ufual market rate-
of intereft which could be afforded out of it, would be fo low^
as to render it impofiible for any but the very wealthiefl people
to live upon the interefl of their money. All people of fmall or
middling fortunes would be obliged to fuperintend themfelves
the employment of their own flocks. It would be neceffary that
almofl every man iliould be a man of bufinefs, or engage in fome-
fort of trade. The province of Holland feems to be approach^
ing near to this flate. It is there unfafhionable not to be a mair
of bufinefs. NecefTity makes it ufual for almofl every man to be
fo, and cuflom every where regulates fafhion. As it is ridiculous
not to drefs, fo is it, in fome meafare, not to be employed, like
other people. As a man of a civil profeffion feems aukward irr
a camp or a garrifon, and is even in fome danger of being defpifed .
there, fo does an idle man among men of bufinefs. .

The highefl ordinary rate of profit may be fuch as, in the pricsf
of the greater part of commodities, eats up the whole of what
fhould go to the rent of the land, and leaves only what is fuffi-.
cient to pay the labour of preparing and bringing them to market, ,
according to the lowefl rate at which labour can any where be r
paid, the bare fubfiflence of the labourer. The workman mufl;:
always have been fed in fome way or other while he was about the
works but the landlord may not always have been paid. The
profits of thfe trade which the fervants of the Eafl India Com-
pany carry on in Bengal may not perhaps be very far from this^
rate*

The proportion which the ufual market rate of interefl ought
to bear to . the ordinary rate of clear profit, neceffarily varies as

profit

120

THE NATURE AND CAUSES OF

B O^O K profit rlfes or falls. Double intereft is in Great Britain reckoned,
u— ' what the merchants call, a good, moderate, reafonable profit;

terms which I apprehend mean no more than a common and
ufaal profit. In a country where the ordinary rate of clear profit
is eight or ten per cent, it may be reafonable that one half of it
ihould go to intereft wherever bufinefs is carried on with borrowed
money. The ftock is at the rifk of the borrower, who, as it
were, infures it to the lender ; and four or five per cent, may
in the greater part of trades, be both a fufficjent profit upon the
rilk of this infurance, and a fuflicient recompence for the trouble
of employing the ftock. But the proportion between intereft^
and clear profit might not be the fame in countries where the
ordinary rate of profit was either a good deal lower, or a good
deal higher. If it were a good deal lower, one half of it perhnps
could not be afibrded for intereft ; and more might be afforded
if it were a good deal higher.

In countries which are faft advancing to riches, the low rate
of profit may, in the price of many commodities, compenfate
the high wages of labour, and enable thofe countries to fell as
cheap as their lefs thriving neighbours, among whom the wages of
labour may be lower.

THE WEALTH OF NATIONS,

121

C H A P. X.

Of Wages and Profit in the different Employments of Labour and.

Stock,

H E whole of the advantages and difadvantages of the dif- CHAP,
ferent employments of labour and flock muft, in the fame

neighbourhood, be either perfectly equal or continually tending
to equality. If in the fame neighbourhood, there was any
employment either evidently more or lefs advantageous than the
reft, fo many people would crowd into it in the one cafe, and fo
many would deferf it in the other, that its advantages would foon
return to the level of other employments. This at leaft would
be the cafe in a fociety where things were left to follow their
natural courfe, where there was perfecl liberty, and where every
man was perfe61:ly free both to chufe what occupation he thought
proper, and to change it as often as he thought proper. Ev6ry
man's intereft would prompt him to feek the advantageous and
to fhun the difadvantageous employment.

Pecuniary wages and profit, indeed, are every where in Eu-
rope extreamly different according to the different employments
of labour and flock. But this difference arifes partly from certain
circumflances in the employments themfelves, which, either really>
or at leafl in the imaginations of men, make up for a fmall
pecuniary gain in fome, and counter- balance a great one in others j
and partly from the policy of Europe, which nowhere leaves
things at perfect liberty.

Vox. 1. R The

[22 THE NATURE AND CAUSES OF

B O^O K The particular confideration of thofe circumftances and of
t— —v^-— J that policy will divide this chapter into two parts.

Part I.

Inequalities artjing from the Nature of the Employments themfelves.^

'T^HE five following are the principal circumftances which, fa
far as I have been able to obferve, make up for a fmalt
pecuniary gain in fome employments, and counter-balance a great
one in others : firft, the agreeablenefs or difagreeablenefs of the
employments themfelves y fecondly, the eafinefs and cheapnefs, or
the difficulty and expence of learning them ; thirdly, the eonftancy
or inconftancy of employment in them ; fouithly, the fmall or
great truft which mult be repofed in thofe who exercife them j,
and, fifthly, the probability or improbability of fuccefs in them.

First, The wages of labour vary with the eafe or hardfhipj^
the cleanhnefs or dirtinefs, the honourablenefs or difhonour-
ablenefs of the employment. Thus in moft places, take the year
round, a journeyman taylor earns lefs than a journeyman weaver.
His work is much eafier. A journeyman weaver earns lefs tharL
a journeyman fmith. His work is not always eafier, but it is^
much cleanlier. A journeyman blackfmith, though an artificer,,
feldom earns £b much in twelve hours as a collier, who is only a
labourer, does in eight. His work is not quite fo dirty, is lefs.
dangerous, and is carried on in day-light, and above ground.
Honour makes a great part of the reward of all honourable pro--
feifions. In point of pecuniary gain, all things confidered, they
are generally under-recompenfed, as I fhall endeavour to fliow
by and by. Difgrace has the contrary efFe(5l. The trade of a

butchex

THE WEALTH OF NATIONS.

123

butcher is a brutal and an odious bufinefs j but it is in moll: places ^ P.

more profitable than the greater part of common trades. The •«

moft deteftable of all employments, that of public ex'ecutioncr,
is, in proportion to the quantity of work done, better paid than
any common trade whatever.

Hunting and fifhing, the moft important employments of
mankind in the rude ftate of fociety, become in its advanced ftat^
their moft agreeable amufements, and they purfue for pleafure
what they once followed from neceflity. In the advanced ftate
of fociety, therefore, they are all very poor people who follow-
as a trade, what other people purfue as a paftime. Fifliermeli
have been fo fince the time of Theocritus. A poacher is every
vvhere a very poor man in Great Britain. In countries where the
rigour of the law fuffers no poachers, the licenfed hunter is not
in a much better condition. The natural tafte for thofe employ-
ments makes more people follow them than can live comfortably
by them, and the produce of their labour, in proportion to its
quantity, comes always too cheap to market to afford any thing but
the moft fcanty fubfiftence to the labourers.

DisAGREEABLENEss and difgrace affe6l the profits of ftock
in the fame manner as the wages of labour. The keeper of an
inn or tavern, who is never mafter of his own houfe, and who is
expofed to the brutality of eveiy drunkard, exercifes neither a very
agreeable nor a very creditable bufmefs. But there is fcarce any
common trade in which a fmall ftock yields fo great a profit.

Secondly, The wages of labour vary with the eafmefs and
cheapnefs or the difficulty and cxpence of learning the bufi-
nefs.

R z

When

124

THE NATURE AND CAUSES OF

B O^O K When any expenfive machine is eredled, the extraordinary
v^— work to be performed by it, before it is worn out, it muft be ex-
pelled, will replace the capital laid out upon it, with at leaft its
ordinary profits. A man educated at the expence of much labour
and time to any of thofe employm.ents wliich require extraordinary
dexterity and ikill, may be compared to one of thofe expenfive
machines. The work which he learns to perform, it muft be
expelled, over and above the ufual wages of common labour, will
replace to him the whole expence of his education, with at leaft the
ordinary profits of an equally valuable capital. It muft do this too^
in a reafonable time, regard being had to the very uncertain du^^
ration of human life, in the fame manner as to the more certain-,
duration of the machine..

The difference between the wages of Ikilled labour and thofe:
of common labour, is founded upon this principle.

The policy of Europe confiders the labour of all mechanicks,
artificers, and manufa6lurers, as {killed labour; and that of all:
country labourers as common labour. It feems to fuppofe that of
the former to be of a more nice and delicate nature than that of
the latter. It is fo perhaps in fome cafes; but in the greater part'
it is quite otherwlfe, as I fliall endeavour to fliew by and by. The
laws and cuftoms of Europe, therefore, in order to quahfy any,
perfon for exercifing the one fpecies of labour, impofe the necef-
fity of an apprenticefiiip, though with different degrees of rigour
in different places. They leave the other free and open to every-
body. During the continuance of the apprenticelhip, the whole
labour of the apprentice belongs to his mafter. In the mean time
he muft, in many cafes, be maintained by his parents or relations,
and in almoft all cafes muft be cloathed by them. Some money too
is commonly given to the mafter for teaching him his trade. They,
4 y^hq

THE WEALTH OF NATIONS.

who cannot give money^ give time, or become bound for more C
than the ufual number of years ; a confideration which, though it u
is not always advantageous to the mafter, on account of the ufual
idlenefs of apprentices, is always difadvantageous to the apprentice.
In country labour, on the contrary, the labourer, while- he is em-
ployed about the eafier, learns the more difficult parts of his bufinefs>
and his own labour maintains him through all the different ftages
of his employment- It is reafonable, therefore, that in Europe
the wages of mechanicks, artificers, and manufa6lurers, fhould be
fomewhat higher than, thofe of common labourers. They are fo
accordingly, and their fuperior gains make them in moft places be
Gonfidered as a fuperior rank of people. This fuperiority, however>
is generally very fmall; the daily or weekly earnings of journeymen
in the more common forts of manufa£l'ures, fuch as thofe of plain
linen and woollen cloth, computed at an average, are, in moft
places, very little more than the day wages of common labourers;.
Their employment, indeed, is more fteady and uniform, and the
fuperiority of their earnings, taking the whole year together, may
be fomewhat greater. It feems evidently, however, to be- no
greater than what is fufficient to compenfate the fuperior expence
of their education.

Education in the ingenious arts and in the liberal profef^
lions, is ftill more tedious and expenfive. The pecuniary re-
com'pence, therefore, of painters and fculptors, of lawyers and
phyfieians> ought to be_ much more Hberal, and it is fo accord-
ingly.

The profits of ftock feem to be very little affeaed by the eafi-
nefs or difficulty of learning the trade in which it is employed.
All the different ways in which ftock is commonly employed in
great towns feem, in reality, to be almoft equally eafy and

equally

126

THE NATURE AND CAlJ.'SES OF

B O^O K equally difficult to learn. Ofte brailch either 6f foreign or domef-
u->^~-^ tick trade, cannot well be a much more intricate bufmeis than
another.

Thirdly, The wages of labour in different occupations vary
with the conftancy or inconftancy of employment.

Employment is much more conftant in fome trades than in
others. In the greater part of manufactures, a journeyman may
be pretty fure of employment almoft every day in the year that he
is able to work. A mafon or bricklayer, on the contrary, can
work neither in hard froft nor in foul weather, .and his employ-
ment at all other times depends upon the occafional calls of his cu- .
flomers. He is liable, in confequence, to be frequently without
any. What he earns, therefore, while he is employed, muft not
only maintain him while he is idle, but make him fame compenfation
for thofe anxious and defponding moments which the thought of
fb precarious a fituation mufl fometimes occafion. Where the
computed earnings of the greater part of manufa6turers, accord-
ingly, are nearly upon a level with the day wages of common la-
bourers, thofe of mafons and bricklayers are generally from one-
half more to double thofe wages. Where common labourers earn -
four and five {hillings a week, mafons and bricklayers frequently
earn feven and eight; where the former earn fix, the latter often
earn nine and ten ; and where the former earn nine and ten, as in
London, the latter commonly earn fifteen and eighteen. No fpecies
of fkilled labour, however, feems more eafy to learn than that of
mafons and bricklayers. Chairmen in London, during the fum-
mer feafon, are faid fometimes to be employed as bricklayers.
The high wages of thofe workmen, therefore, are not fo much the
recompence of their Ikill, as the compenfation for the inconftancy ,
of their employment.

A HOUSE

THE. WEALTH OF NATIONS.

A HOUSE carpenter feems to exercife rather a nicer and more
ingenious trade than a mafon. In moil places, however, for it
is not univerfally fo, his day-wages are fomewhat lower. His
employment, though it depends much, does not depend fo ea-
tircly upon the occafional calls of his cuftomersi and it is not
liable to be interrupted by the weather.

When the trades which generally afford conflant employment^
happen in a particular place not to do fo, the wages of the work-
men always rife a good deal above their ordinary proportion to
thofe of common labour. In London almofl: all journeymen ar-
tificers are Hable to be called upon and difmilTed by their mafters
from day to day, and from week to week, in the fame manner a§
day-labourers in other places. The lovvefl order of artificers^
journeymen taylors, accordingly earn there half a crown a-day,
though eighteen-pence may be reckoned tlie wages of common
labour. In fmall towns and country villages, the wages of
journeymen taylors frequently fcaree equal thofe of common labour j
but in London they are often many weeks without employment,
particularly during the furamer.

When the inconftancy of employment is combined with the
hardfhip, difagreeablenefs and dirtinefs of the work, it fometimes
raifes the wages of the moft common labour above thofe of the moft
fkilful artificers. A collier working by the piece is fuppofed, at
Newcaftle, to earn commonly about double, and in many parts of
Scotland about three times the wages of common labour. His,
high wages arife altogether from the hardfiiip, difagreeablenefs,
and dirtinefs of his work. His employment may, upon moft oc-
cafions, be as conflant as he pleafes. The coal-heavers in Lon-
don exercife a trade which in hardfhip, dirtinefs, and difagreeable-
nefs, almofl equals that of colliers j and from the unavoidable
7 - irregularity

128

THE NATURE AND CAUSES OF

B O^O K irregularity in the arrivals of coal (hips, the employment of the
^^^yL.^ greater part of them is neceflarily very inconftant. If colliers,
therefore, commonly earn double and triple the wages of common
labour, it ought not to feem unreafonable that coal-heavers fhould
fbmetimes earn four and five times thofe wages. In the enquiry
made into their condition a few years ago, it was found that at
the rate at which they were then paid, they could earn from fix
to ten {hillings a- day. Six fhillings are about four times the wages
of common labour in London, and in every particular trade, the
loweft common earnings may always be confidered as thofe of the
far greater number. How extravagant foever thofe earnings may
appear, if they were more than fufiicient to compenfate all the
difagreeable circumflances of the bufinefs, there would foon be
fo great a number of competitors as, in a trade which has
no exclufive privilege, would quickly reduce them to a lower
rate.

The conflancy or inconftancy of employment cannot afFc6l
the ordinary profits of flock in any particular trade. Whether the
.ftock is or is not conflantly employed depends, not upon the trade,
but the trader.

Fourthly, The wages of labour vary according to the fmall
or great trufl which muft be repofed in the workmen.

The wages of goldfmiths and jewellers are eveiy where fuperior
to thofe of many other workmen, not only of equal, but of much
fuperior ingenuity ; on account of the precious materials with which
they are intrufted.

We trufl our health to the phyfician ; our fortune and fome-
times our life and reputation to the lawyer and attorney. Such

confidence

THE WEALTH OF NATIONS.

129

confidence could not fafely be repofed in people of a very mean or C HA P.
low condition. Their reward muft be fuch, therefore, as may \^-^^<mi
give them that rank in the fociety which fo important a truft re-
quires. The long time and the great expence which muft be
laid out in their education, when combined with this cir- "
cumftance, neceflarily enhance ftill further the price of their la-
bour. /

When a perfon employs only his own (lock in trade, there is
no truft; and the credit which he may get from other people,
depends, not upon the nature of his trade, but upon their opi-
nion of his fortune, probity, and prudence. The different
rates of profit, therefore, in the different branches of trade,
cannot arife from the different degrees of truft repofed in the
traders.

Fifthly, The wages of labour in different employments
vary according to the probability or improbability of fuccefs in
them.

The probability that any particular perfon fhall ever be qualified
for the employment to which he is educated, is very different in
different occupations. In the greater part of mechanick trades,
fuccefs is almoft certain j but very uncertain in the liberal profef-
fions. Put your fon apprentice to a fhoemaker, there is little
doubt of his learning to make a pair of (hoes: But fend him to
ftudy the law, it is at leaft twenty to one if ever he makes fuch
proficiency as will enable him to live by the bufinefs. In a per-
fedly fair lottery, thofe who draw the prizes ought to gain all
that is loft by thofe v^ho draw the blanks. In a profeflion
where twenty fail for one that fucceeds, that one ought to gain
all that fliould have been gained by the unfuccefsful twenty. The

Vol. I. S counfellor

THE NATURE AND CAUSES OF

counfelloi* at law who, perhaps, at near forty years of age, begins:
to make fomething by his profefFion, ought to receive the retribu-^
tion, not only of his own fo tedious and expenfive education, but
of that of more than twenty others who are never likely to make
any thing by it. How extravagant foever the fees of counfellors at
law may fometimcs appear, their real retribution is never equal'
to this. Compute in any particular place, what is likely to be
annually gained, and what is likely to be annually fpent, by all the-
different workmen in any common trade, fuch as that of fhoemakers,
or weavers, and you will find that the former fum will generally
exceed the latter. Eut make the fame computation with regard to^
all the counfellors and ftudents of law, in all the different inns of
court, and you will find that their annual gains bear but- a very
fmail proportion to their annual expence, even though you rate
the former as high, and the latter as low, as can well be done;.
The lottery of the law, therefore, is very far from being a
perfe6lly fair lottery;, and that, as well as many other libei*al -
and honourable profeffions, are, in point of pecuniary gain^
evidently under-recompenced.

Those profeffions keep their level, however, with other occu-
pations, and, notwithftanding thefe difcouragements,, all the moic
generous and liberal fpirits are eager to crowd into them. Two
different caufes contribute to recommend them. Firff, the defire
of the reputation which attends upon fuperior excellence in any
of them^; and, fecondly, the natural confidence which every man
has more or lefs> not only in his own abilities, but in his own good
fortune.

To excel in any profeffion, in which but few ariive at medio-
crity, is the moft decifive mark of what is called genius or fuperior
■ talents. The publick admiration which attends upon fuch dif-

tinguifhed

THE WEALTH OF NATIONS.

tingiilflied abilities, makes always a part of their reward ; a greater
or fmaller in proportion as it is higher or lower in degree. It
makes a confiderable part of it in the profeffion of phyfick ; a
flill greater perhaps in that of law; in poetry and philofophy
it makes almoft the whole.

There are fome very agreeable and beautiful talents of which
the pofTeflion commands a certain fort of admiration ; but of which
the exercife for the fake of gain is confidered, whether from reafon
or prejudice, as a fort of publick proftitution. The pecuniary re-
compence, therefore, of thofe who exercife them in this manner,
mull: be fufficient, not only to pay for the time, labour, and
expence of acquiring the talents, but for the difcredit which attends
the employment of them as the means of fubfiftence. The exor-
bitant rewards of players, opera-fingers, opera-dancers, 6cc. are
founded upon thofe two principles ; the rarity and beauty of the
talents, and the difcredit of employing them in this manner. It
feems abfurd at firft fight that we fhould defpife their perfons, and
yet reward their talents with the moft profufe Hberality. While
we do the one, however, we muft of neceflity do the other.
Should the publick opinion or prejudice ever alter with regard to
fuch occupations, their pecuniary recompence would quickly
diminifh. More people would apply to them, and the competition
would quickly reduce the price of their labour. Such talents,
though far from being common, are by no means fo rare as is
imagined. Many people poflefs them in great perfe6tion, who dif-
dain to make this ufe of them ; and many more are capable of
acquiring them, if any thing could be made honourably by them.

The over- weening conceit which the greater part of men hav^
of their own abilities, is an antient evil remarked by the philofo-
phers and moralifls of all ages. Their abfurd prefumption in

S 2 their

THE NATURE AND CAUSES OF

K their own good fortune, has been lefs taken notice of. It is, how-
-J ever, if poffible, ftill more univerfal. There is no man living
who, when in tolerable health and fpirits, has not fome fhare of
it. The chance of gain is by every man more or lefs over-valued,
and the chance of lofs is by moft men under- valued, and by fcarce
any man, who is in tolerable health and fpirits, valued more than.
it is worth.

That the chance of gain is naturally overvalued, wc may
learn from the univerfal fuccefs of lotteries. The world neither
ever faw, nor ever will fee, a perfeftly fair lottery ; or one in which,
the whole gain compenfated the whole lofs ; becaufe the undertaker
could make nothing by it. In the ftate lotteries the tickets are
really not worth the price which is paid by the original fubfcribers,
and yet commonly fell in the market for twenty, thirty, and
fometimes forty per cent, advance. The vain hope of gaining
fome of the great prizes is the fole caufe of this demand. The
fobereft people fcarce look upon it as a folly to pay a fmall fum
for the chance of gaining ten or twenty thoufand pounds ; though
they know that even that fmall. fum is perhaps twenty or thirty per
cent, more than the chance is worth. In a lottery in which no prize
exceeded twenty pounds, though in other refpefts it approached
much nearer to a p'erfeflly fair one than tlie common ftate lot-
teries, there would not be the fame demand for tickets. In order
to have a better chance for fome of the great prizes, fome people
purchafe feveral tickets, and others, fmall fhares in a ftill greater
number. There is not, however, a more certain proportion in
mathematicks than that the more tickets you adventure upon, the
more likely you are to be a lofer. Adventure upon all the tickets
in the lottery, and you lofe for certain > and the greater the number
of your tickets the nearer you approach to this certainty.

That

THE WEALTH OF NATIONS.

That the chance of lofs is frequently undervalued, and fcarce C
ever valued more than it is worth, we may learn from the very
moderate profit of infurers. In order to make infurance, either
from fire or fea rifk, a trade at all, the common premium muft be
fufficient to compenfate the common lofles, to pay the expence of
management, and to afford fuch a profit as might have been drawn
from an equal capital employed in any common trade. The perfon
who pays no more than this, evidently pays no more than the real
value of the rifk, or the loweft price at which he can reafonably .expe6t
to infure it. But though many people have made a little money by
infurance, very few have made a great fortune ; and from this confi-
deration alone it feems evident enough that the ordinary balance of
profit and lofs is nor more advantageous in this than in other com-
mon trades by which fo many people make fortunes. Moderate,,
however, as the premium of infurance commonly is, many people-
defpife the rifk too much to care to pay it. Taking the whole,
kingdom at an average, nineteen houfes in twenty, or rather per-
haps ninety-nine in a hundred, are not infured. from fire. Seat
rifk is more alarming to the greater part of people, and the pro-
portion of fhips infured- to thofe not infured is much greater..
Many fail, however, at all feafons and even in time of war, with- -
out any infurance. This may fometimes, perhaps, be done without
any imprudence. When a great company, or even a great mer-
chant, has twenty or thirty fhips at fea, they may, as it, were^,
infure one another. The premium faved upon them; all, may
more than compenfate fuch loffes as they are likely to meet with in:
the common courfe of chances. The negleft of infurance upon
fhipping, however, in the fame manner as upon houfes, is, in:
moft cafes, the effe£l of no fuch nice calculation, but of mere-
thoughtlefs rafhnefs and prefumptuous contempt of the rifk.

The contempt of rifk and the prefumptuous hope of fuccefs^,
are in no period of life more aftive than at the age at which young ;

people^

^34

Tl^E NATURE AND CAUSES OF

BO^OK people chufe their profeffions. How little the fear of misfortune
V— is then capable of balancing the hope of good luck, appears ftili
more evidently in the readinefs of the common people to enlift as
foldiers or to go to fea, than in the eagernefs of thofe of better
falhion to enter into what are called the liberal profeflions.

What a common foldier may lofe is obvious enough. With-
out regarding the danger, however, young volunteers never enlift
fo readily as at the beginning of a new war; and though they
■ . liave fcarce any chance of preferment, they figure to themfelves in
their youthful fancies a thoufand occafions of acquiring honour and
diftin6lion which never occur. Thefe romantick hopes make the
whole price of their blood. Their pay is lefs than that of common
labourers, and in adlual fervice their fatigues are much greater.

The lottery of the fea is not altogether fo difadvantageous as
, that of the army. The fon of a creditable labourer or artificer
;JCnay frequently go to fea with his father's confent ; but if he enlifts
as a foldier, it is always without it. Other people fee fome chance
of his making fomething by the one trade : Nobody but himfelf
fees any of his making any thing by the other. The great
admiral is lefs the object of publick admiration than the great
general, and the higheft fuccefs in the fea fervice promifes a lefs
brilliant fortune and reputation than equal fuccefs in the land.
The fame difference runs through all the inferior degrees of prefer-
ment in both. By the rules of precedency a captain in the navy
ranks v^ith a colonel in the army : but he does not rank with him
in the common eftimation. As the great prizes in the lottery are
lefs, the fmaller ones muft be more numerous. Common failors,
therefore, more frequently get fome fortune and preferment than
common foldiers ; and the hope of thofe prizes is what principally
recommends the trade. Though their fidll and dexterity are much
^ fuperior

THE WEALTH OF NATIONS. 135

fiTpenor to that of almoft any artificers, and though their whole C HA P.
life is one continaal fcene of hardfhip and danger, yet for all this v—
dexterity and (kill, for all thofe hardfliips and dangers, while they
remain in the condition of common failors, they receive fcarce any
other recompence but the pleafure of exercifing the one and of
furmounting the other. Their wages are not greater than thofe
of common labourers at the port which regulates the rate of fea-
mens wages. As they are continually going from port to port,
the monthly pay of thofe who fail from all the different ports of
Great Britain, is more nearly upon a level than that of any other
workmen in thofe different places ; and the rate of the port to and
from which the greateft number fail, that is the port of London,
regulates that of all the reft. At London the- wages of the greater
part of the different claffes of workmen are about double thofe of
the fame claffes at Edinburgh. But the failors who fail from the
port of London feldom earn above three or four fliillings a month
more than thofe who fail from the port of Leith, and the difference
is frequently not fo great. In time of peace, and in the merchant
fervice, the London price is from a guinea to about feven and
twenty fliillings the calendar month. A common labourer in,
London, at the rate of nine or ten fhillings a week, may earn in
the calendar month from forty to five and forty fhillings. The
failor, indeed, over and above his pay, is fupplied with provifions^
Their value,, however, may not perhaps always exceed the diffe^-
rence between his pay and that of the common labourer; and>
though it fometimes fliould, the excefs will, not be clear gain to =
the failor, bccaufe he cannot fhare it with his wife and family,
whom he muft maintain out of his wages at home..

The dangers and hair-breadtli efcapes of a life of adventures,
inflead of difheartening young people, feem frequently to recom-
mend a trade to them. A tender mother, among the inferior-

ranks;

136 THE NATURE AND CAUSES OF

BOOK ranks of people, is often afraid to fend her fon to fchool at a fea-
w-v^-*-! port town, left the fight of the ftiips and the converfation and
adventures of the failors fhould entice him to go to fea. The
diftant profpecl of hazards, from which we can hope to extricate
ourfelves by courage and addrefs, is not difagreeable to us, and
does not raife the wages of labour in any employment. It is
otherwife with thofe in which courage and addrefs can be of no
avail. In trades which are known to be very unwholefome, the
■wages of labour are always remarkably high. Unwholefomeneft
is a fpecies of difagreeablenefs, and its effefts upon the wages of
labour are to be ranked under that general head.

In all the different employments of ftock, the ordinary rate of
profit varies more or lefs with the certainty or uncertainty of the
returns. Thefe are in general lefs uncertain in the inland than in
the foreign trade, and in fome branches of foreign trade than in
others ; in the trade to North America, for example, than in that
to Jamaica. The ordinary rate of profit always rifes more or lefs
with the rifle. It does not, however, feem to rife in proportion
to it, or fo as to compenfate it compleatly. Bankruptcies are
moft frequent in the moft hazardous trades. The moft hazardous
of all trades, that of a fmuggler, though when the adventure
fucceeds it is likewife the moft profitable, is the infallible road to
bankruptcy. The prefumptuous hope of fuccefs feems to adl here
as upon all other occafions, and to entice fo many adventurers into
thofe hazardous trades, that their competition reduces the profit
below what is fufficient to compenfate the rifk. To compenfate it
compleatly, the common returns ought, over and above the ordi-
nary profits of ftock, not only to make up for all occafional lofTes,
but to afford a furplus profit to the adventurers of the fame nature
with the profit of infurers. But if the common returns were fuf-
7 ficient

THE WEALTH OF NATIONS.

ficient for all this, bankruptcies would not be more frequent In C
thefe than in other trades. v-

Of the five circumftances, therefore, which vary the wages of
labour, two only afFe<5l the profits of ftock j the agreeablenefs or
difagreeablenefs of the bufmefs, and the rilk or fecurity with which
it is attended. In point of agreeablenefs or difagreeablenefs, there
is little or no difference in the far greater part of the different
employments of ftock ; but a great deal in thofe of labour ; and
the ordinary profit of ftock, though it rifes with the rifk, does not
always feem to rife in proportion to it. It fliould follow from all
this, that, in the fame fociety or neighbourhood, the average and
ordinary rates of profit in the different employments of ftock
fhould be more nearly upon a level than the pecuniary wages of
the different forts of labour. They are fo accordingly. The dif-
ference, between the earnings of a common labourer and thofe of
a well employed lawyer or phyfician, is evidently much greater,
than" that, between the ordinary profits in any two different
branches of trade. The apparent difference, befides, in the profits
of different trades, is generally a deception arifing from our not
always diftinguifhing what ought to be confidered as wages, from '
what ought to be confidered as profit.

Apothecaries profit is become abye-wwd, denoting fomething
uncommonly extravagant. This great apparent profit, however,
is frequently no more than the reafonable wages of labour. The
Ikiil of an apothecary is a much nicer and more delicate matter
than that of any artificer whatever ; and the truft Vv'hich is repofed
in him is of much greater importance. He is the phyfician of the
poor in all cafes, and of the rich v/hen the diftrefs or danger is
not very great. His reward, therefore, ought to be fuitable to
his fkill and his truft, and it arifes generally from the price at

Vol. I. T which

138

THE NATURE AND CAUSES OF

B 0^0 K which he fells his drugs. But the whole drugs which the beft
u^^v^— ^ employed apothecary, in a large market town, will fell in a year,
may not perhaps coft him above thirty or forty pounds. Though
he fhould fell them, therefore, for three or four hundred, or at a
thoufand per cent, profit, this may frequently be no more than the
reafonable wages of his labour charged, in the only way in which
he can charge them, upon the price of his drugs. The greater
part of the apparent profit is real wages difguifed in the garb of
profit.

In a fmall fea-port town, a little grocer will make forty or fifty
. per cent, upon a ftock of a fingle hundred pounds, while a con-
fiderable wholefale merchant in the fame place will fcarce make
eight or ten per cent, upon a ftock of ten thoufand. The trade of
the grocer may be necefl!ai*y for the conveniency of the inhabitants,,
and the narrownefs of the market may not admit the employment
of a larger capital in the bufinefs. The man, liowever, muft not
only live by his trade, but live by it fuitably to the qualifications
which it requires. Befides pofi^efllng a little capital, he mufir be
able to read, write, and account, and muft be a tolei'able judge
too of, perhaps, fifty or fixty different forts of goods, their prices;
qualities, and the markets where they are to be had cheapeft. He
mull hav^e all the knowledge, in fhort, that is neceflTary for a great
merchant, which nothing hinders him from becoming but the-
want of a fufiicient capital. Thirty or forty pounds a year cannot
be confidered as too great a recompence for the labour of a perfon
fb accompJifhed. Deduft this from the feemingly great profits of
his capital, and little more will remain, perhaps, than the ordinary,
profits of flock. The greater part of the apparent profit is, in.
this cafe too, real wages.

The difference between the apparent profit of the retail and
that of the wholefale trade, is much lefs in the capital than in

fmall

THE WEALTH OF NATIONS.

139

fmall towns and country villages. Where ten thoufand pounds CH AP,
can be employed in the grocery trade, the wages of the grocer's «— y-— •
labour make but a very trifling addition to the real profits of To
great a flock. The apparent profits of the wealthy retailer, there-
fore, are there more nearly upon a level with thofe of the wholefale
merchant. It is upon this account that goods fold by retail are
generally as cheap and frequently much cheaper in the capital than
in fmall towns and country villages. Grocery goods, for example,
are generally much cheaper j bread and butcher's-meat frequently
as cheap. It cofts no more to bring grocery goods to the great
town than to the country village ; but it cofts a great deal more
to bring corn and cattle, as the greater part of them muft be
brought from a much greater diftance. The prime coft of grocery
goods, therefore, being the fame in both places, they are cheapeft
where the leaft profit is charged upon them. The prime coft of
bread and butcher's-meat is greater in the great town than in the
country village ; and though the profit is lefs, therefore, they are
not always cheaper there, but often equally cheap. In fuch
articles as bread and butcher's-meat, the fame caufe, which
diminifties apparent profit, increafes prime coft. The extent of
the market, by giving employment to greater ftocks, diminifties
apparent profit ; but by requiring fupplies from a greater diftance,
it increafes prime coft. This diminution of the one and increafe
of the other feem, in moft cafes, nearly to counter-balance one
another which is probably the reafon that, though the prices of
corn and cattle are commonly very different in different parts of
the kingdom, thofe of bread and butcher's-meat are generally very
nearly the fame through the greater part of it.

Though the profits of ftock both In the wholefale and retail
trade are generally lefs in the capital than in fmall towns and
country villages, yet great fortunes are frequently acquired from

T i fmall

140

THE NATURE AND CAUSES OF

B O^O K fiiiall beginnings in the former, and fcarce ever in the latter. In
t^-^l,^ fmall towns and country villages, on account of the narrownefs
of the market, trade cannot always be extended as flock extends.
In fuch places, therefore, though the rate of a particular perfon's
profits may be very high, the fum or amount of them can never be
very great, nor confequently that of his annual accumulation. In.
great towns, on the contrary, trade can be extended as flock
increafes, and the credit of a frugal and thriving man in-
creafes much fafter than his flock. His trade is extended in pro-
portion to the amount of both, and the fum or amount of his.
profits is in proportion to the extent of his trade, and his annual
accumulation in proportion to the amount of his profits. It feldom
happens, however, that great fortunes are made even in great
towns by any one regular, eflablifhed, and well known branch of
bufinefs, but in confequence of a long life of induflry, frugaUty,.
and attention. Sudden fortunes, indeed, are fometimes made in
fuch places by what is called the trade of fpeculation. The fpe-
culative m^erchant exercifes no one regular, eflablifhed, or well
known branch of bufinefs. He is a corn merchant this year, and
a wine mei chant the next, and a fugar, tobacco, or tea merchant
the year after. He enters into every trade when he forefees that it
is Ukely to be more than commonly profitable, and he quits it
when he forefees that its profits are hkely to return to the level of
other trades. His profits and lofTes, therefore, can bear no regu-
lar proportion to thofe of any one eflablifhed and well known
branch of bufmefs. A bold adventurer may fometimes acquire a
confideiable fortune by two or three fuccefsful fpeculations but is
jufl as likely to lofe one by two or three unfuccefsful ones. This
trade can be carried on no where but in great towns. It is only
in places of the mofl extenfive commerce and correfpondence that
the intelligence requifite for it can be had.

The five circumflances above mentioned, though they occafion
confiderable inequalities in the wages of labour and profits of flock,'
7 • occafion

THE WEALTH OF NATIONS.

occafion none in the whole of the advantages and difad vantages, C H^A P.
real or imaginary, of the different employments of either. The u>->».J
nature of thofe circumftances is fuch, that they make up for a
fmall pecuniary gain in fome, and counter-balance a great one in
others.

In order, however, that this equality may take place in the
whole of their advantages or difadvantages, three things are re-
quifite even where there is the moft perfe6l freedom. Firft, the
employments muft be well known and long eftablifhed in the neigh-
bourhood ; fecondly, they muft be in their ordinary, or what may
be called their natural ftate; and, thirdly, they muft be the fole
or principal employments of thofe who occupy them.

First, this equality can take place only in thofe employments
which are well known, and have been long eftablifhed in the
neighbourhood.

Where all other circumftances are equal, wages are generally
higher in new than in old trades. When a projedlor attempts to
eftablifti a new manufa6ture, he muft at firft entice his work-
men from other employments by higher wages than they can either
earn in their own trades, or than the nature of his work would)
Gtherwife require, and a confiderable time muft pafs away before
he can venture to reduce them to the common level. Manufac-
tures for which tiie demand arifes altogether from fafliion and
fancy, are continually changing, and feldom laft long enough to
be confideredas old eftabliflied manufactures. Thofe, on the con-
trary, for which the demand arifes chiefly from ufe or neceility, are
lefs liable to change, and the fame form or fabrick may continue
in demand for whole centuries together. The wages of labour,
therefore, are likely to be higher in manufactures of the former,

than:

THE NATURE AND CAUSES OF

FOO K than inthofeofthe latter kind. Birmingham deals chiefly in ma-
< — v--^ nufa6lures of the former kind J Sheffield in thofe of the latter; and
the wages of labour in thofe two different places, are faid to be
fuitable to this difference in the nature of their manufa6lures.

The eftablifhment of any new manufa6]:ure, of any new branch
■of commerce, or of any new pra6lice in agriculture, is always a
/peculation, from which the projector promifes himfelf extraordi-
nary profits. Thefe profits fometimes are very great, and fome-
times, more frequently, perhaps, they are quite otherwife; but
in general they bear no regular proportion to thofe of other old
trades in the neighbourhood. If the project fucceeds, they are
commonly at firfl very high. When the trade or pra6lice becomes
thoroughly eflablifhed and well known, the competition reduces
them to the level of other trades.

Secondly, this equality in the whole of the advantages and dif-
advantages of the different employments of labour and ftock, can
take place only in the ordinary, or what m-ay be called the natural
ftate of thofe employments.

The demand for almoft every different fpecies of labour, is
fometimes greater and fometimes lefs than ufual. In the one
cafe the advantages of the employment rife above, in the other
they fall below the common level. The demand for country labour
is greater at hay-time and harvefl, than during the greater part
of the year; and wages rife with the demand. In time of war,
when forty or fifty thoufand failors are forced from the merchant
fervice into that of the king, the demand for failors to merchant
fliips ncceffarily rifes with their fcarcity, and their wages upon
fuch occafions commonly rife from a guinea and feven and twenty
(hillings, to forty (hillings and three pounds a month. In a de-
caying

THE WEALTH OF NATIONS. 14:

caying manufacture, on the contrary, many workmen, rather C lyv P.
than quit their old trade, are contented with fmalJer wages
than would otherwife be fuitable to the nature of their employ-
ment.

The profits of flock vary with the price of the commodities in
which it is employed. As the price of any commodity rifes above
the ordinary or average rate, the profits of at leafl fome part of
the ftock that is employed in bringing it to market, rife above
their proper level, and as it falls they fink below it. AH com-
modities are more or lefs liable to variations of price, but fome
are much more fo than others. In all commodities which are pro-
duced by human indultry, the quantity of induftry annually em-
ployed is necefTarily regulated by the annual demand, in fuch a
manner that the average annual produce may, as nearly as
pofTible, be equal to the average annual confumption. In fome
employments, it has already been obferved, the fame quantity of in?-
dnflry will always produce the fame, or very nearly the fame quan-
tity of commodities. In the linen or woollen manufactures, for
example, the fame number of hands will annually work up very
nearly the fame quantity of linen and woollen cloth. The varia-
tions in the market price of fuch commodities, therefore, can arife
only from fome accidental variation in the demand. A publick
mourning raifes the price of black cloth. But as the demand for
moft forts of plain linen and woollen cloth is pretty uniform, fo is
likewife the price. But there are other employments in which the
fame quantity of induftry will not always produce the fame quantity
of commodities. The fame quantity of induftry, for example, will, in
different years, produce very different quantities cf corn, wine, hops, ^
fugar, tobacco, 6cc. The price of fuch commodiiies, therefore, varies
not only with the variations of demand, but with the much greater
and more frequent variations of quantity, and is confequently ex-
ti*ea,mly fluctuating. But the profit of fome of the dealers muft

necefTarily.

THE NATURE AND CAUSES OF

BOOK neccflarily flu6luate with the price of the commodities. The ope-
/-,„ ^ rations of the fpeculative merchant are principally employed about
fuch commodities. He endeavours to buy them up when he fore-
fees that their price is hkely to rife, and to fell them when it is
likely to fall.

Thirdly, This equality in the whole of the advantages and
difadvantages of the different employments of labour and flock,
can take place only in fuch as are the fole or principal employments
of thofe who occupy them.

When a perfon derives^ his fubfiflence from one employment,
which does not occupy the greater part of his time ; in the inter-
vals of his leifure he is often wiUing to work at another for
lefs wages than would otherwife fuit the nature of the employ-
ment.

There flill fubfifts in many parts of Scotiand a fet of people
called Cotters or Cottagers, though they were more frequent fbme
years ago than they are now. They are a fort of out-fervants of
the landlords and farmers. The ufual reward which they receive
from their maflers is a houfe, a fmall garden for pot-herbs, as
much grafs as will feed a cow, and, perhaps, an acre or two of
bad arable land. When their mafler has occafion for their labour,
he gives them, befides, two pecks of oatmeal a week, worth about
fixteen-pence flerling. During a great part of the year he has
little or no occafion for their labour, and the cultivation of their
own little pofTeffion is not fuflicient to occupy the time which is
left at their own difpofal. When fuch occupiers were more nu-
merous than they are at prefent, they are faid to have been willing
to give their fpare time for a very fmall recompence to any body,
and to have wrought for lefs wages than other labourers. In an-
' . • tient

THE WEALTH OF NATIONS.

tlent times they feem to have been common all over Europe. In C
countries ill cultivated and worfe inhabited, the greater part of u
landlords and farmers could not otherwife provide themfelves with
the extraordinary number of hands, which country labour requires
at certain feafons. The daily or weekly recompence which fuch
labourers occafionally received from their mafters, was evidently
not the whole price of their labour. Their fmall tenement made
a confiderable part of it. This daily or weekly recompence, how-
ever, feems to have been confidered as the whole of it, by many
writers who have colle6led the prices of labour and provifions in
antient times, and who have taken pleafure in reprefenting both as
wonderfully low.

The produce of fuch labour comes frequently cheaper to market
than would otherwife be fuitable to its nature. Stockings in many
parts of Scotland are knit much cheaper than they can any where be
wrought upon the loom. They are the work of fervants and la-
bourers, who derive the principal part of their fubfiftence from
fome other employment. More than a thoufand pair of Shetland
ftockings are annually imported into Leith, of which the price
is from five-pence to feven-pence a pair. At Learwick, the fmall
capital of the Shetland iflands, ten- pence a day, I have been af-
fured, is a common price of common labour. In the fame iflands
they knit worfted ftockings^ to the value of a guinea a pair and
upwards. ,

The fpinning of linen yarn is carried on in Scotland nearly in
the fame way as the knitting of ftockings, by fervants who are
chiefly hired for other purpofes. They earn but a very fcanty fub-
fiftence, who endeavour to get their whole livelihood by either of
thofe trades, in moft parts of Scotland ftie is a good Ipinner who
can earn twenty-pence a week.

Vol. I. U la

«|6 THE p^AJURE A^J^, .^^l^^E| OF

P^O IC In opulent countries the market is generally fo extenfive, that
u.-"v--^ any one trade is fufficient to employ the whole labour and ftock of
thofe who occupy it. Inftances of people's Hving by one employ-
ment, and at the fame time deriving fome little advantage from-
another, occur chiefly in poor countries. The following inftance,
however, of fomething of the fame kind is to be found in the
capital of a very rich one. There is no city in Europe, I believe,
in which houle-rent is dearer than in London, and yet I know no
capital in which a furniflied apartment can be hired fo cheap.
Lodging is not only much cheaper in London than in Paris ; it
is much cheaper than in Edinburgh of the fame degree of goodnefs ;.
and what may feem extraordinary, the dearnefs of houfe-rent is the
caufe of the cheapnefs of lodging. The dearnefs of houfe-rent in
London, arifes, not only from thofe caufes which render it dear
in all great capitals, the dearnefs of labour, the dearnefs of all the
iBiaterials pf" building, which muft generally be brought from a
great diflance, and above all tliv? dearnefs of ground-rent,, every
landlord a(5ling the part of a monopohfl, and frequently exa^ing,
a higher rent for a fingle acre of bad land in a town,, than can be-
had for a hundred of the beft in the country j but it arifes in part
from the peculiar manners and cuftoms of the people,, which obHge.
every mafter of a family to hire a whole houfe from top to bottom.
■A dwelling-houfe in England means every thing that is cojitained
under the fame roof. In France, Scotland, and many other parts
of Europe, it frequently means no more than a fingle ftory. A
tradefman in London is obliged to hire a whole houfe in that part
the town where his cuftomers live. His (hop is upon the ground-
floor, and he and his family fleep in the garret; and he endeavours
to pay a part of his houfe-rent by letting the two middle ftories to
lodgers. He expefts to maintain his family by his trade, and not
by his lodgers. Whereas, at Paris and Edinburgh, the people
who let lodgings, have commonly no other means of fubfiftence ;

and

THE WEALTH OF NATIONS.

and the price of the lodging muft pay, not only the rent of the C
houfe, but the whole expence of the family. u

P A R T II.

Inequalities occajioned by the "Policy of Europe,

gUCH are the inequalities in the whole of the advantages and
difadvantages of the different employments of labour and ftock,
which the defe6l of any of the tliree requifites above mentioned
muft occafion, even where there is the moft perfe6l liberty. But
the policy of Europe, by not leaving things at perfe(5t liberty, oc-
cafions other inequalities of much greater importance.

It does this chiefly in the three following ways. Firft, by re-
ftraining the competition in fome employments to a fmaller num-
ber than would otherwife be difpofed to enter into them 5 fecondly,
by increafmg it in others beyond what it naturally would bej
and, thirdly, by obftru6ling the free circulation of labour and
ftock, both from employment to employment and from place to
place.

First, The policy of Europe occafions a very important ine-
quality in the whole of the advantages and difadvantages of the
different employments of labour and ftock, by reftraining the
competition in fome employments to a fmaller number than might
otherwife be difpofed to enter into them.

The exclufive privileges of corporations are the principal means
it makes ufe of for this purpofe.

The exclufive privilege of an incorporated trade neceffarily
reftrains the competition, in the town where it is eftablifhed, to

U 2 thofe

THE NATURE AND CAUSES OF

thofe who are free of the trade. To have Served an apprentic6flilj>"
in the town, under a mafter properly qualified, is commonly the
neceflary requifite for obtaining this freedom. The bye-laws of
the corporation regulate fometimes the number of appientices
which any mafter is allowed to have, and almoft always the number
of years which each apprentice is obliged to ferve. The intention
of both regulations is to reftrain the competition to a much fmaller
number than might otherwife be difpofed to enter into the trade.
The limitation of the number of apprentices reftrains it direftly.
A long term of apprenticefhip reftrains it more indirectly, but ?^
efie6lually, by increafmg the expence of education.

^ , In, Sheffield no mafter cutler can have more than one apprentice
at a time, by a bye-law of the corporation. In Norfolk and Nor-
wich no mafter weaver can have more than two apprentices, under
pain of forfeiting five pounds a month to the king. No mafter
batter can have more than two apprentices any where in England,
or in the Englifti plantations, under pain of forfeiting five pounds
a month, half to. the king, and half to him who ftiall fue in any^
court of record. Both thefe regulations, though they have be^]^^
confirmed by a publick law of the kingdom, are evidently dic-
tated by the fam»e corporation fpirit which ena6led the bye-law
9f. Shefiield^^,. The filk weavers in London had fcarce been irir
corporated a year wliep*. they enabled ^^^ ibye-law reftraining any
raafter from having more than two apprentices at a time. It re-
quired a particular a6l of |^arUanjen]; to refcind this bye-law.

Seven years feem antiently to have been, all over Europe, the
ufual term eftablifhed for the duration of >apprenticefhips in the
greater part of incorporated trades. All fuch incorporations were
antiently called univerfities which indeed is the proper Latin
name for any incorporation whatever. The univerfity of fmiths,
the univerfity of taylors, &c, are exprelTions which we commonly

meet

THE WEALTH OF NATIONS

meet with in the old charters of antient towns. When thofe par*- C
titular incorporations which are now peculiarly called univerfities l-
were finl eftabliflied, the term of years which it was necefTary to
ftiidy, in order to obtain the degree of mader of arts, appears
evidently to have been copied from the term of apprenticefliip in
common trades, of which the incorporations were much more
antient. As to have wrought feven years under a mafter properly
qualified, was neceflary in order to intitle any perfon to become a
mafter and to have himfelf apprentices in a common trade; fo to
have ftudied feven years under a mafter properly qualified, was ne-
ceflary to entitle him to become a mafter, teacher, or doftor
(words antiently fynonimous) in the hberal arts, and to have
fcholars or apprentices (words likewifc originally fynonimous) to
ftudy under him.

By the 5th of Elizatetli, commonly called the Statute of Ap~
prenticefhip, it was enafted, that no perfon ftiould for the future
exercife any trade, craft, or miftery at that time ^xercifed in
England, unlefs he had previoufly ferved to it an apprenticefhip of
feven years at leaft; and what before had been the bye-law of
many particular corporations, became in England the general and
public law of all trades carried on in market towns. For though
the words of the ftatute are very general, and feem plainly to
include the whole kingdom, by interpretation its operation has
been limited to market- towns, it having been held that in
country villages a perfon may exercife feveral different trades,
though he has not ferved a feven years apprenticefhip to each,
they being neceffary for the conveniency of the inhabitants, and
the number of people frequently not being fufficient to fuppljr
each with a particular fett of hands.

By a ftri6l interpretation of the words too the operation of
this ftatute has been limited to thofe trades which were eftabliflied
Vol. I. U 3 in

150 THE NATURE AND CAUSES OF

BOOK in England before the 5th of Elizabeth, and has never been

c extended to fuch as have been introduced fince that time. Thisu'&

limitation has given occafion to feveral diftindions which, con-
fidered as rules of police, appear as foolilh as can well be imagined.
It has been adjudged, for example, that a coach-maker can nei-
ther himfelf make nor employ journeymen to make his coach-» j j
wheels, but muft buy them of a mafter wheel- wright; this latter
trade having been exercifed in England before the 5th of Eli-
zabeth. But a wheel- wright, though he has never ferved an
^pprenticefhip to a coach-maker, may either himfeif make or
•employ journeymen to make coaches the trade of a coach-
maker not being within the ftatute, becaufe not exercifed in
England at the time when it was made. The manufactures of
Manchefter, Birmingham, and Wolverhampton, are many of
them, upon this account, not within the ftatute j not having been
jexercifed in England before the 5th of Elizabeth.

In France, the duration of apprenticefliips is different in dif-
ferent towns and in different trades. In Paris, five years is the
^term required in a great number; but before any perfon can be
.qualified to exercife the trade as a mafter, he muft^ jn many of
them, ferve five years more as a journeyman. During this latter
term he is called .the companion of his mafter, and the term itfelf
is , called his companionfliip^

In Scotland there is no general law which regulates univerfally
•the duration of apprenticefhips. The term is different in different
-corporations. Where it is long, a part of it may generally be redeemed
by paying a fmall fine. In moft towns too a very fmall fine is
•fufficient to purchafe the freedom of any corporation. The wea-
vers of linen and hempen cloth, the principal manufa6lures of
.the country, as well ^s all other artificers fubfervient to them,
' .w'heel- makers, reel-makers, &c, may exercife their trades in any
4 town

THE WEALTH OF NATIONS.

town corporate without paying any fine. In all towns corporate C P.
all perfons are free to fell butchers-meat upon any lawful day of
the week. Three years is in Scotland a common term of ap-
prenticefhip even in fome very nice trades, and in general 1 know
of no country in Europe in which corporation laws are fa little
opprelTive.

The property which every man has in his own laboui', as it Is
the original foundation of all other property, fo it is the moft
facred and inviolable. The patrimony of a poor man lies in the_
ftrength and dexterity of his hands j and to hinder him froni
employing this ftrength and dexterity in what manner he thinks^
proper without injury to his neighbour, is a plain violation of this
moft facred property. It is a manifeft encroachment upon the
juft liberty both of the workman, and of thofe who might be
difpofed to employ him. As it hinders the one from working at
what he thinks proper, fo it hinders the other from employing
whom they think proper. To judge whether he is fit to be em-
ployed, may furely be trufted to the difcretion of the employers
whofe intereft it fo much concerns. The affefled anxiety af the
law- giver left they fhould employ an improper perfon, is evidently
as impertinent as it is oppreffive.

The inftitution of long apprenticefliips can give nO' fecurity
that infufficient workmanfliip ftiall not frequently be expofed to
publick fale. When this is done it is generally the effedl: of fraud,,
and not of inability ; and the longeft apprenticefliip can give no
fecurity againft fraud. Quite different regulations are neceliary
to prevent this abufe. The fterling mark upon plate, and the
ftamps upon linen and woollen cloth, give the purchafer much
greater fecurity than any ftatute of apprenticeftiip. He generally
looks at thefe, but never thinks it worth while to enquire whether
the workman had ferved a feven years apprenticefliip.

The

152 THE NATURE AND CAUSES OF, .

B O^O K The inftitutlon of long apprenticefhips has no tendency to form
ju— young people to induftry. A journeyman who works by the piece
is hkely to be induftrious, becaufe he derives a benefit from every
exertion of his induftry. An apprentice is Hkely to be idle, and
ahnoft always is lb, becaufe he has no immediate intereft to be
otherwife. In the inferior employments, the fweets of labour
conCft altogether in the recompence of labour. They who are
fooneft in a condition to enjoy the fweets of it, are likely fooneft to
conceive a rehfli for it, and to acquire the early habit of induftry. A
young man naturally conceives an averfion to labour, when for a
long time he receives no benefit from it. The boys who are put
out apprentices from publick charities are generally bound for more
. than the ufual number of years, and they generally turn out very
idle and worthlefs.

Apprenticeskips were altogether unknown to the antients.
The reciprocal duties of mafter and apprentice make a confiderable
article in every modern code. The Roman law is perfe£tly filent
with legard to them. I know no Greek or Latin word (I might
venture, I believe, to afTert that there is none) which expreffes the
idea Vv'e now annex to the word Apprentice, a fervant bound to
work at a particular trade for the benefit of a mafter, during a
term of years, upon, condition that the mafter fhall teach him
that trade.

Long apprenticefliips are altogether unnecefTary. The arts,
which are much fuperior to common trades, fiich as thofe of making
clocks and watclies, contain no fuch myftery as to require a long
courfe of inftruclion. The firft invention of fuch beautiful ma-
chines, indeed, and even that of Ibme of the inftruments employed
in making them, miift, no doubt, have been the work of deep
thought and long time, and may juftly be confidered as among the

happieft

THE WEALTH OF NATIONS.

, liappieft efforts of human ingenuity. But when both have been C H^A P.
fairly invented and are well underftood, to explain to any young

-man, in the compleateft manner, how to apply the inftruments and
how to conftru6l the machines, cannot well require more than the
lefTons of a few weeks : perhaps thofe of a few days might be
fufficient. In the common mechanick trades, thofe of a few days
might certainly be fufficient. The dexterity of hand, indeed, even
in common trades, cannot be acquired without much practice and
experience. But a young man would pra6life with much more
diligence and attention, if from the beginning he wrought as
a journeyman, being paid in proportion to the little work which he
could execute, and paying in his turn for the materials which he
might fometimes fpoil through aukwardnefs and inexperience. His
education would generally in this way be more effectual, and
always lefs tedious and expenfive. The mafter, indeed, would be
a lofer. He would lofe all the wages of the apprentice, which he
now favcs, for feven years together. In the end, perhaps,
the apprentice himfelf would be a lofer. In a trade fo eafily learnt
he would have more competitors, and his wages, when he came
to be a compleat workman, would be much lefs than at prefent.
The fame increafe of competition would reduce the profits of the
maflers as well as the wages of the workmen. The trades, the
crafts, the myftcries, would all be lofers. But the public would
be a gainer, the work of all artificers coming in this way much
cheaper to market.

It is to prevent this redu<Elion of price, and confequently of wages
and profit, by reftraining that free competition which would mofl
certainly occafion it, that all corporations, and the greater part of cor-
poration laws, have been eflablifhed. In order to ere6i: a corporation,
no other authority in antient times was requifite in many parts of
Europe, but that of the town corporate in which it was eftablifhed.

Vol. I. X In

154

THE NATURE AND CAUSES OF

B OO K In England, indeed, a charter from the king was likewifenecefTary^
But this prerogative of the crown feems to have been referved
rather for extorting money from the fubje6l, tlian for the defence
of the common liberty againft fuch oppreflive monopolies." Upon
paying a fine to the king, the charter feems generally to have been
readily granted j and when any particular clafs of artificers or traders
thought proper to a6l as a corporation without a charter, fuch
adulterine guilds, as they were called, were not always difFranchifed
upon that account, hut obliged to fine annually to tlie king for
permifllon to exercife their ufurped privileges. The immediate
infpe6lion of all corporations, and of the bye-laws which they might
think proper to enaft for their own government, belonged to the
town corporate in which they were eftabliflied ; and whatever dif-
cipline was exercifed over them, proceeded commonly,., not from the.
king, but from that greater incorporation of which thofe fubordinate
ones were only parts or members.

The government of towns corporate was altogether in the
hands of traders and artificers ; and it was the manifeft intereft of
every particular clafs of them, to prevent the market from being
overftocked, as they commonly exprefs it, with their own particular
fpecies of induflry ; which is in reality, to keep it always under-
flocked. Each clafs was eager to eftabfilh regulations proper for
this purpofe, and, provided it was allowed to do fo, was willing to
Gonfent that every other clafs fliould do the fame. In confequence
of fuch regulations, indeed, e?xh clafs was obliged to buy the goods^
they had occafion for from every other within the town, fomewhat
dearer than they otherwife might have done. But in recompence,,
they were enabled to fell their own juft as much dearer fo that fb^
far it was as broad as long, as they fay; and in the deaHngs of the
different claflTes within the town with one another, none of them
were lofers by thefe regulations. But in their dealings with the

4 country

THE WEALTH OF NATIONS.

•country they were all great gainers ; and in thefe latter deal- C
ings confifts the whole trade which fupports and enriches »-
every town.

Every town draws its whole fubfiftence, and all the materials of
its induftry, from the country. It pays for thefe chiefly in two
ways : firft, by fending back to the country a part of thofe
materials wrought up and manufactured j in which cafe their price
is augmented by the wages of the workmen, and the profits of their
matters or immediate employers : fecondly, by fending to it a
part both of the rude and manufa6)-ured produce, either of other
countries, or of diftant parts of the fame country, imported into the
town J in which cale too the original price of thofe goods is
augmented by the wages of the carriers or failors, and by the pro-
ifits of the m.erchants who employ them. In what is gained upon the
firft of thofe two branches of commerce, confifts the advantage
which the town makes by its manufa6lures j in what is gained
upon the fecond, the advantage of its inland and foreign trade.
The wages of the workmen, and the profits of their diff'erent em-
ployers, make up the whole of what is gained upon both. What-
ever regulations, therefore, tend to increafe thofe wages and
profits beyond what they otherwife would be, tend to enable the
town to purchafe, with a fmaller quantity of its labour, the pro-
<3uce of a greater quantity of the labour of the country. They
give the traders and artificers in the town an advantage over the
landlords, farmers, and labourers in the country, and break down
that natural equality which would otherwife take place in the
commerce which is carried on between them. The whole annual
produce of the labour of the fociety is annually divided between
thofe two different fetts of people. By means of thofe regulations
a greater fhare of it is given to the inhabitants of the town than
would otherwife fall to them ,; and a lefs to thofe of the country.

X 2 The

THE NATURE AND CAUSES OF

B O^O K The price which the town really pays for the provifions and
u--v'— '-^ materials annually imported into it, is the quantity of manufa61:ure&
and other goods annually exported from it. The dearer the latter
are fold, the -cheaper the former are bought. The induftry of the
town becomes more, and that of the country lefs advantageous.

That the induftry which is carried on in towns is, every where
in Europe, more advantageous than that which is carried on in
the country, without entering into any very nice computations,
we may fatisfy ourfelves by one very fimple and obvious obfervation.
In every country of Europe we find, at leaft, a hundred people who
have acquired great fortunes from fmalL beginnings by trade and
manufa6iures, the induftry which properly belongs to towns, for
one who has done fo by that which properly belongs to the country,
the raifing of rude produce by the improvement and cultivation of
land. Induftry, therefore, muft be better rewarded, the wages of
labour and the profi.ts of ftock muft evidently be greater in the one
fituation than in the other. But ftock and labour naturally feek the
moft advantageous employment. They naturally, therefore, refort
as much as they can to the town,, and defert the countiy.

The inhabitants of a town, being collefted into one place, can
eafily combine together.'* The moft infignificant trades carried on in
towns have accordingly, m fome place or other, been incorporated j
and even where they have never been incorporated, yet the corporation
fpirit, the jealoufy of ftrangers, the averfion to take apprentices,
or to communicate the fecret of their trade, generally prevail in
them, and often teach them, by voluntary alTociations and agree-
ments, to prevent that free competition which they cannot pro-
hibit by bye-laws. The trades which employ but a fm all number
of hands, run moft eafily into fuch combinations. Half a dozen
wool-combers perhaps ai^e necelTary to keep a thoufand /pinners

and

THE WEALTH OF NATIONS.

'57

and weavers at work. By combining not to take apprentices they C I-I^A P.
can not only engrofs the employment, but reduce the whole manu- i",^-^
fa6lure into a fort of flavery to themfelves, and raife the price
of their labour much above what is due to the nature of their
work. 'uojif.

The Inhabitants of the country, difperfed in diftant places,
cannot eafily combine together. They have not only never been
incorporated, but the corporation fpirit never has prevailed
among them. No apprenticefhip has ever been thought neceflary
to qualify for hufbandry, the great trade of the country. After
what are called the fine arts, and the liberal profeffions, however,
there is perhaps no trade which requires fo great a variety of know-
ledge and experience. The innumerable volumes which have been
written upon it in alt languages, may fatisfy us, that among the
wifeft and moft learned nations, it has never been regarded as a
matter very eafily underflood. And from all thofe volumes we
fliall in vain attempt to collect that knowledge of its various and
complicated operations, which is commonly poireflfed even by the
common farmer j how contemptuoufly foever the very contemptible
authors of fome of them may fometimes affe6l to fpeak of him.
There is fcarce any common mechanick trade, on the contrary, of
which all the operations may not be as compleatly and dili:in(51'ly.
explained in a pamphlet of a very few pages, as it is" poffible for
words illuftrated by figures to explain them. In the hiftory of the
arts, now publifhing by the French academy of fciences, feveral.
of them are ad'aally explained in this manner. The direction of
operations, befides, which muft be varied' widi eveiy change of the
weather, as well as with many other accidents, requires much more
judgement and difcretion, than that of thofe which are always the.
fame or very nearly the fame.

7 ' No-T

THE NATURE AND CAUSES OF

B O^O K Not only the art of the farmer, the general direction of the
c— — J operations of hufbandry, but many inferior branches of country
labour require much more fkill and experience than the greater
part of mechanick trades. The man who works upon brafs and
iron, w^orks with inftruments and upon materials of which the
temper is always the fame, or very nearly the fame. But the man
who ploughs the ground with a team of horfes or oxen, works
with inftruments of which the health, ftrength, and temper are
very different upon different occafions. The condition of the
materials which he works upon too is as variable as that of the
inftruments which he works with, and both require to be managed
with much judgement and difcretion. The common ploughman,
though generally regarded as the pattern of ftupidity and ignorance,
is feldom defective in this judgement and difcretion. He is lefs
accuftomed, indeed, to focial intercourfe than the mechanick who
lives in a town. His voice and language are more uncouth and
more difficult to be underftood by thofe who are not ufed to them.
His underftanding, however, being accuftomed to confider a greater
variety of objefls, is generally much fuperior to that of the other,
whofe whole attention from morning till night is commonly oc-
cupied in performing one or two very fimple operations. How
much the lower ranks of people in the country are really fuperior
to thofe of the town, is well known to every man whom either
bufmefs or curiofrty has led to converfe much with both. In China
and Indoftan accordingly both the rank and the wages of country
labourers are faid to be fuperior to thofe of the greater part of
artificers and manufa6lurers. They would probably be fo every
where, if corporation laws and the corporation fpirit did not pre-
vent it.

The fuperiority which the induftry of the towns has eveiy
where in Europe over that of the country, is not altogether owing

THE WEALTH OF NATIONS.

to carporations and corporation laws. It is fupported by many C
other regulations. The high duties upon foreign manufa6lures u
and upon all goods imported by alien merchants, all tend to the
fame purpofe. Corporation laws enable tlie inhabitants of towns
to raife their prices, without fearing to be under-fold by the free
competition of their own countrymen. Thofe other regulations
fecure them equally againft that of foreigners. The enhancement
of price occafioned by both is every where finally paid by the
landlords, farmers, and labourers of the country, who have feldom
oppofed the eftablifhment of fuch monopolies. They have com-
monly neither inclination nor fitnefs to enter into combinations and
the clamour and fophiftry of merchants and manufa6lurers eafily
perfuade them that the private intereft of a part, and of a fub-
ordinate part of the fociety, is the general intereft of the whole

In Great Britain the fiiperiority of the induftry of the towns
over that of the country, feems to have been greater formerly
than in the prefent times. The wages of country labour ap-
proach nearer to thofe of manufa6luring labour, and the profits
of ftock employed in agriculture to thofe of trading- and manu-
fa6luring ftock, than they are faid to have done in the laft century,
or in the beginning of the prefent. This change may be regarded
as the necefTary, though very late confequence of the extraordinary
encouragement given to the induftry of the towns. The ftock
accumulated in them comes in time to be fo great, that it can no
longer be employed with the antient profit in that Ipecies of in-
duftry which is peculiar to them. That induftry has its limits
like every other ; and the increafe of ftock, by increafing the com-
petition, necefTarily reduces the profit. The lowering of profit
in the town forces out ftock to the country, where, by creating a
new demand for country labour, it necefTarily raifes its wages. It
then fpreads itfelf, if I may fay fo, over the face of the land, and by

being

i6o

THE NATURE AND CAUSES OF

B O^O K being employed in agriculture is in part reftored to the country,
w^-v*^*^ at the expence of which, in a great meafure, at had originally
been accumulated in the town. That every where in Europe the
greateft improvements of the country have been owing to fuch
overflowings of the ftock originally accumulated in the towns,
I fliall endeavour to fhow hereafter and at the fame time to de-
monftrate, that though fome countries have by this courfe attained
to a confiderable degree of opulence, it is in itfelf neceffarily flow,
uncertain, liable to be difturbed and interrupted by innumerable
accidents, and in every refpedl contrary to the order of nature and
of reafon. The interefts, prejudices, laws and cuftoms which
have given occafion to it, I fhall endeavour to explain as fully
and diftinftly as I can in the third and fourth books of this
enquiry.

People of the fame trade feldom meet together, even for
merriment and diverfion, but the converfation ends in a confpiracy
againft the publick, or in fome contrivance to raife prices. It is
impoffible indeed to prevent fuch meetings, by any law which
either could be executed, or would be confiftent with liberty and
juftice. But though the law cannot hinder people of the fame
trade from fometimes alTembling together, it ought to do no-
thing to facilitate fuch alTemblies ; much lefs to render them ne-
cefTary.

A REGULATION which obligcs all thofe of the fame trade in
a particular town to enter their names and places of abode in a
publick regifter, facilitates fuch affcmblies. It conne6ls indivi-
duals who might never othervv^ife be known to one another, and
gives every man of the trade a direction where to find every
other man of it.

A REGULATION

^THE WEALTH OF NATIONS.

A REGULATION which cnablcs thofe of the fame trade to tax C
themfelves in order to provide for their poor, their fick, their w-
widows and orphans, by giving them a common interefl: to manage,
renders fuch affemblies necefTary.

An incorporation not only renders them neceflary, but makes the
a6l of the majority binding upon the whole. In a free trade an
effectual combination cannot be eftablifhed but by the unanimous
confent of every fmgle member of it, and it cannot laft longer than
every fingle member of it continues of the fame mind. The
majority of a corporation can ena6t a bye- law with proper penal-
ties, which will limit the competition more efFedluall-y and more
durably than any voluntary combination whatever.

The pretence that corporations are neceffary for the better
government of the trade, is without any foundation. The real
and efFe6lual difcipline which is exercifed over a workman, is
not that of his corporation, but that of his cuftomers. It is the
fear of lofmg their employment which reftrains his frauds and
correfts his negligence. An exclufive corporation neceflarily
weakens the force of this difcipline. A particular fett of work-
men muft then be employed, let them behave well or ill. It is
upon this account that in many large incorporated towns no
tolerable workmen are to be found, even in fome of the moft necef-
ifary tra^. If you would have your work tolerably executed,
^t muft be done in the fuburbs, where the workmen having no
exclufive privilege, have nothing but their character to depend
upon, and you muft then fmuggle it into the town as well as
you can.

It is in this manner that the policy of Europe, by reftrainirtg
the competition in fome employments to a fmaller number than
Vol. I. y would

THE NATURE AND CAUSES OF

B O^O K would otlienvife be difpofed to enter intx> them, occafions a very
y-y'— imp^'tant inequality in the whole of the advantages and difad-
vantJJges of the different employments of labour and (lock.

^.'■Secondly> The policy of Europe, by increafmg the compe-
tition in fome employments beyond what it naturally would be,
cccafions another inequality of an . oppofite kind in the whole of
the advantages and difadvantages of the different employments of
labour and flock. ..^

■ ' I

It has been coniidered as of fo much importance that a proper
number of young people fliould be educated for certain profef-
fions, that, fometimes the pubHck, and fometimes the piety of
private founders have eflabhfhed many penfions, fcholarfhips, ex-
hibitions, burfaries, &c. for this purpofe, which draw many more
people into thofe trades than could otherwife pretend to follow
them. In all chriflian countries, I believe, the education of the
greater part of churchmen is paid for in this manner. Very few
of them are educated altogether at their own expence. The long,
tedious and expenfive education, therefore, of thofe who are, will
not always procure them a fuitable reward, the church being
crowded with people who, in order to get employment, are willing
to accept of a .much fmaller recompence than what fuch an edu-
cation wouJ((^ otherwife have entitled them to ; and in this manner
the competition of the poor takes away the reward of tlie rich.
It would be indecent, no doubt, to compare either a curate .-or
a chaplain with a journeyman in any common trade. The pay
of a curate or chaplain, however, may very . properly be confidered ^
as of the fame nature with the wages of a journeyman. They
are, all three, paid for their work according to the contrail which .
they may happen to make with their refpe6live fuperiors. , Till ■
after the middle of the fourteenth century, five merks, containing
4 about.

THE WEALTH OF NATIONS.

about as much filver as ten pounds of our prefent money, was in
England the ufual pay of a curate or ftipendiary parifli prieft, as
we find it regulated by the decrees of feveral different national
councils. At the fame period four-pence a day, containing the
fame quantity of filver as a fhilUng of our prefent money, was
declared to be the pay of a mafter mafon, and three-pence a day,
equal to nine-pence of our prefent money, that of a journeyman
mafon. The wages of both thefe labourers, therefore, fuppofing
them to have been conflantly employed, were much fuperior to
thofe of the curate. The wages of tiie mafter mafon, fuppofing
him to have been without employment one-third of the year,
would have fully equalled them. By the 12th of Queen Anne,
c. 12, it is declared, " That whereas for want of fufficient main-
** tenance and encouragement to curates, the cures have in feveral
" places been meanly fupplied, the bifliop is, therefore, empow-
'* ered to appoint by writing under his hand and feal a fufficient
*' certain ftipend or allowance, not exceeding fifty and not lefs than
twenty pounds a year." Forty pounds a year is reckoned at
prefent very good pay for a curate, and notwithftanding this adt
of parliament, there are many curacies under twenty pounds a
year. There are journeymen ihoe-makers in London who earn forty
pounds a year, and there is fcarce an induftrious workman of any
kind in that metropolis who does not earn more than twenty. This
laft fum indeed does not exceed what is frequently earned by com-
mon labourers in many country pariflies. Whenever the law has
attempted to regulate the wages of workmen, it has always been
rather to lower them than to raife them. But the law has upon
many occafions attempted to raife "the wages of curates, and for
the dignity of the church, to oblige the re6lors of pariflies to
give them more than the wretched maintenance which they them-
felves might be willing to accept of. And in both cafes the lavv
feems to have been equally inefFe6lual, and has never either been

y 2 able

164

THE NATURE AND CAUSES OF

B 0^0 K able to raife the wages of curates or to fink thofe of labourers to
Wi— the degree that was intended j becaufe it has never been able to
hinder either the one from being willing to accept of lefs than the
legal allowance, on account of the indigence of their fituation and
- the multitude of their competitors ; or the other from receiving
more, on account of the contrary competition of thofc who expe6led
to derive either profit or pleafurc from employing them.

The great benefices and other ecclefiaftical dignities fupport
the honour of the church, notwithftanding the mean circum-
ftances of fome of its inferior members. The refped paid to the
profeffion too makes fome compenfation even to them for the mean-
nefs of their pecuniary recompence. In England, and in all Roman
Catholick countries, the lottery of the church is in reality much
more advantageous than is neceflary. The example of the churches
of Scotland, of Geneva, and of feveral other protefi:ant churches,
may fatisfy us that in fo creditable a profeffion, in which education
is fo eafily procured, the hopes of much more moderate benefices
will draw a fufficient number of learned, decent and refpeflable
men into holy orders.

In profeffions in which there are no benefices, fuch as law and
phyfick, if an equal proportion of people were educated at the
publick expence, the competition would foon be fo great, as to
fink very much their pecuniary reward. It might then not be
worth any man's while to educate his fon to either of thofe pro-
feffions at his own expence. They would be entirely abandoned
to fuch as had been educated by thofe publick charities, whofe
numbers and neceffities would oblige them in general to content
themfelves with a very miferable recompence, to the entire degra-
dation of the now refpe6lable profeffions of law and phyfick.

That

THE WEALTH OF NATIONS.

That unprofperous race of men commonly calkd men of CH^AP.
letters, are pretty much in the fituation which lawyers and phyfi- v-— f
cians^ probably would be in upon the foregoing fuppofition. In
every part of Europe the greater part of them have been educated
for the church, but have been hindered by different reafons from
entering into holy orders. They have generally, therefore, been
educated at the publick expence, and their numbers are every where
fo great as commonly to reduce the price of their labour to a very
paultry recompence.

Before the invention of the art of printing, the only employ-
ment by which a man of letters could make any thing by his .
talents, was that of a publick teacher,, or by communicating to
other people the curious and ufeful knowledge which he had
acquired himfelf : And this is ftilL furely a more honourable, a
more ufeful, and in general even a more profitable employment
than that other of writing for a bookfeller, to which the art of
printing has given occafion. The time and ftudy, the genius,
knowledge and application requifite to q^ualify an eminent teacher
of the fciences, are at leaft equal to what is necefiary for the greateft '
pra6litioners in law and phyfick. But the ufual reward of the emi-
nent teacher bears no proportion to that of the lawyer or phyfi-
cian ; becaufe the trade of the one is crowded with indigent people,
who have been brought up to it at the publick expence ; whereas
thofe of the other two are incumbered with very few who have not-
been educated at their own. The ufual recompence, however,
of pubhck and private teachers, fmall as it may appear, would
undoubtedly be lefs than it is, if the competition of thofe yet mor4-
indigent men of letters who write for bread was not taken out of
the market. Before the invention of the art of printing, a fcholar
and a beggar feem to have been terms very nearly fynonymou^;
The different governors of the univerfities before that time appear
to have often granted licences to their fcholars to beg..
7 •

i66

THE NATURE AND CAUSES OF

BO^O K antient times, before any charities of this kind had been efta-

blifhed for the education of indigent people to the learned profef-
fions, the rewards of eminent teachers appear to have been much
;tnore confiderable. Ifocrates, in what is called his difcourfe againft
the fophifts, reproaches the teachers of his own times with incon-
fiftency. " They make the moft magnificent promifes to their
fcholars, fays he, and undertake to teach them to be wife, to be
happy, and to be juft, and in return for fo infportant a fervice
they ftipulate the paultry reward of fo :r or five minae. They who
teach wifdom, continues he, ought certainly to be wife themfelves ;
but if any man was to fell fuch a bargain for fuch a price, he would
be convi6led of the moft evident folly." He certainly does not
mean here to exaggerate the reward, and we may be,aflured that
it was not lefs than he reprefents it. Four minae were equal to
thirteen pounds fix fhillings and eight pence : five minae to fixteen
pounds thirteen fhillings and four pence. Something not leCs
than the largeft of thofe two fums, therefore, muft at that time
have been ufually paid to the moft eminent teachers at Athens.
Ifocrates himfelf demanded ten minas, or thirty-three pounds fix
fhillings and eight pence, from each fcholar. When he taught at
Athens, he is liiid to have had an hundred fcholars. I underftand
this to be the number whom he taught at one time, or who attended
what we would call one courfe of leflures, a number which will
not appear extraordinary from fo great a city to fo famous a teacher,
who taught too what was at that time the moft fafhionable of
all fciences, rhetorick. He muft have made, therefore, by each
courfe of leflures, a tlioufand minae, or 2323-^' 8</. A tliou-
fand minae, accordingly, is faid by Plutarch in another place, to
have been his Dida6lron or ufual price of teaching. Many other
eminent teachers in thofe tim.es appear to have acquired great for-
tunes. Gorgias made a prefent to the temple of Delphi of his own
ftatue in folid gold. We muft not, I prefume, fuppofe that it

was

THE WEALTH OF NATIONSj

167

was as large as the lifp. fjis way of living, as well as. that of C Ha p.
Hippias and Protagoras, two other eminent teachers of thofe v----v---*>
times, is reprefented by Plato as fplendid even to oftentation.
yiato himfelf is faid to have lived with a good deal of magnificence.
Ariftotle, after having been tutor to Alexander and moft munifi-
cently rewarded, as it is univerfally agreed, both by him and his
father Philip, thought it worth while, notvvitliftanding, to return •
to Athens, in order to refume tp.e teaching of his fchool. Teachers
of the fciences were probably in thofe times lefs common than they
came to be in an age or two .afterwards, when the competition
had probably fomewhat reduced both the price of their labour and
the admiration for their perfons. ,T'he-^ niofl eminent of them,
however, appear always to have enjoyed a degi'ee of confideraticxn ;
much fuperior to any of the like profeflion in the prefent times. .
The Athenians fent Carneades the academick, and Diogenes the
ftoick, upon a folemn embaiTy to Rome ; and though their city had
then declined from its former grandeur, it was flill an independent
and confiderable republick. Carneades too was a Babylonian by
birth, and as there never was a people more jealous of admitting
foreigners to publick offices than the Athenians, , their confidei'atioa ,
for him muft have been very great*. iJxisvBxI ol bif,>

^notf moHw isdmr

This inequality is upoiji the whole, perhaps, rather advantageous .

than hurtful to tlie publick. . It . may fomewhat degrade the profef-
fion of a puWick teacher j ^but the cheapnefs of literary education is .•
fucely an advantage which greatly over-balances this trifling incon-
veniency. The publick too might derive ftill greater benefit from
-it, if the conftitution of thofe fchools and colleges, in which educa-
tion is caiTied on, was more reafonable than it is ^at prefent through
^e greater part of Europe. '^^abi^

Thirdly-, The policy of Europe, by obftrufting the free circu-<
lation of labour and ftcwjk both from employment to jemploymentj, ,

and -

t68

THE NATURE ANt> CAUSE^'^^F

B O^O K and from place to place, occafions in fome cafes a very inconve*
\ — V— J nient inequality in the whole of the advantages and difadvantages
of their different employments,

The ftatute of apprenticefhip obftrufts the free circulation of
labour from one employment to another, even in the fame place.
The exclufive privileges of corporations obftrudl it from one place
to another, even in the fame employment.

It. frequently happens that while high wages are given to the
workmen in one manufacture, thofe in another are obliged to
content themfelves with bare fubfiftence. The one is in an ad-
vancing ftate, and has, therefore, a continual demand for new
hands : The other is in a dechning ftate, and the fuper-abundancc
of hands is continually increafing. Thofe two manufactures may
fometimes be in the fame town, and fometimes in the fame neigh-
bourhood, without being able to lend the leaft affiftance to one
another. The ftatute of apprentice Qiip may oppofe it in the one
cafe, and both that and an exclufive corporation in the other. In
many different manufactures, however, the operations are fo much
alike, that the workmen could eafily change trades with one an-
other, if thofe abfurd laws did not hinder them. The arts of
weaving plain linen and plain iilk, for example, are almoft entirely
the ifame. That of weaving plain woollen is foraewhat different ;
but the difference is fo infignificant that either a linen or a filk
^weaver might become a tolerable workman in a very few days. If
^ny of thofe three capital manufactures, therefore, were decaying,
the workmen might find a refource in one of the other two which
was in a more profperous condition ^ and their wages would neither
rife too high in the thriving, nor fmk too low in the decaying manu-
•fadture. The linen manufacture indeed is, in England, by a
particular ftatute, open to every body ; but as it is not much cul-
tivated

.^THE WEALTH OF NATIONS

169

tivated through the greater part of the country, it can afford no CHAP,
general refource to the workmen of other decaying manufa6lures, u--v-^
who, wherever the flatute of apprenticefliip takes place, have no
other choice but either to come upon the pariHi, or to work as
common labourers, for which, by their habits, they are much worfe
.qualified than for any fort of manufadlure that bears any refem-
blance to their own. They generally, therefore, chufe to come
upon the pariQi.

Whatever obftru6ls the free circulation of labour from one
employment to another, obftru6ls that of ftock likewife ; the quan-
tity of flock which can be employed in any branch of bufinefs
depending very much upon that of labour which can be employed
in it. Corporation laws, however, give lefs obflru6lion to the
free circulation of flock from one place to another than to that of
labour. It is every where much eafier for a wealthy merchant to
obtain the privilege of trading in a town corporate, than for a
poor artificer to obtain that of working in it.

The obflru6lion which corporation laws give to the free circu-
lation of labour is common, I believe, to every part of Europe.
That vvhich is given to it by the poor laws, fo far as I know, is
peculiar, to England. It confifls in the difficulty which a poor man
finds in obtaining a fettlement, or even in being allowed to exercife
his induftry in any parifli but that to which he belongs. It is the
labour of artificers and manufa6lurers only of which the free cir-
culation is obflru<5led by corporation laws. The difficulty of
obtaining fettlements obflru6ls even that of common labour. It
may be worth while to give fome account of the rife, progrefs, and
prefent flate of this diforder, the greatefl perhaps of any in the
police of England.

Vol. I, ' Z When

170

THE NATURE AND CAUSES OF

BO^OK When by the dellruftion of rtionafteries the poor had been
V*— v~' deprived of the charity of thofe reUgious houfes, after fome other
inefFechial attempts for their relief, it was enafted by the 43d of
Elizabeth, c. 2, that every parifh fliould be bound to provide for
its own poor; and that overfeers of the poor fliould be annually
appointed, who, with the churchwardens, fliould raife by a pai*ifh>
rate, competent fums for this purpofe.

By tliis ftatute the neceflity of providing for their own poor
was indifpenfibly impofed upon every parifli. Who were to be
confidered as the poor of each parifh, therefore, became a queftion
of fome importance. This queftion, after fome variation, was at
laft determined by the 13th and 14th of Charles II. when it was
ena6led that forty days undifturbed refidence fliould gain any
perfon a fettlement in any parifh ; but tliat within tliat time it^
fliould be lawful for two juftices of the peace, upon complaint,
made by the church-wardens or overfeers of the poor, to remove
any new inhabitant to the parifh where he was laft legally fettled j
unlefs he either rented a tenement of ten pounds a year, or could
give fuch fecurity for the difcharge of the parifli where he v/as then
living, as thofe juflices fliould judge fufhcient.

Some frauds, it is faid, were committed in confequence of this
ftatute ; parifh officers fometimes bribing their own poor to go
clandeflinely to another parifh, and by keeping themfelves con-
cealed for forty days to gain a fettlement there, to the difcharge of
that to which they properly belonged. It was enacted, therefore,
by the ifl of James II. that the forty days undifturbed refidence of
any perfon neceflary to gain a fettlement, fhould be accounted only
from the time of his delivering notice in writing, of the place of
his abode and the number of his family, to one of the church-
wardens or overfeers of the parifh where he came to dwell.

But.

THE WEALTH OF NATIONS.

But parifh officers, it feems, were not always more honeft with C P.
regard to their own, than they had been with regard to other ■w"-H
paiifties, and fometimes connived at fuch intrufions, receiving the
notice, and taking no proper fteps in confequence of it. As every
pcrfon in a parifh, therefore, was fuppofed to have an intereft to
prevent as much as pofllble their being burdened by fuch intruders,
it was further ena6led by the 3d of William III, that the forty
days refidence fhould be accounted only from the publication of
fuch notice in writing on Sunday in the church immediately after
divine fervice.

" After all, fays Do6lor Burn, this kind of fettlement, by
** continuing forty days after publication of notice in writing, is
" very feldom obtained j and the defign of the a6ls is not fo much
" for gaining of fettlements, as for the avoiding of them, by
** perfons coming into a parifh clandeftinely : for the giving of
" notice is only putting a force upon the parifli to remove. But
*Mf a perfon's fituation is fuch, that it is doubtful whether he is
" a6lually removeable or not, he fliall by giving of notice compel

the parifli either to allow him a fettlement uncontefted, by fuf-
" fering him to continue forty days or, by removing him, to try

the right."

This fl:atute, therefore, rendered it almoft impra6licable for a
poor man to gain a nev/ fettlement in the old way, by forty days
inliabitancy. But that it might not appear to preclude altogether
the common people of one parifli from ever efl:abliflilng themfelves
Vith fecurity in another, it appointed four other ways by which a
fettlement might be gained without any notice delivered or pub-
iilhed. The firft was, by being taxed to parifli rates and paying
them; the fecond, by being ele6led into an annual parifli office and
ferving in it a year; the third, by ferving an apprenticefliip in the

Z 2 parifli p

172 THE NATURE AND CAUSES OF

B O^O K parifli ; the fourth, by being hired into fervice there for a year,
ju-v^ and continuing in the fame fervice during the whole of it.

Nobody can gain a fettlement by either of the two firft ways,
but by the pubHck deed of the whole parifh, who are too well
aware of the confequences to adopt any new corner who has nothing
but his labour to fupport him, either by taxing him to parifli rates,
or by electing him into a parifh office.

No married man can well gain any fettlement in either of the
two laft ways. An apprentice is fcarce ever married, and it is.
exprefly ena6led, that no married fervant fhall gain any fettlement
by being hired for a year. The principal efFe6l of introducing
fettlement by fervice, has been to put out in a great meafure the
old fafhion of hiring for a year, which before had been fo cuftomary
in England, that even at this day, if no particular term is agreed
upon, the law intends that every fervant is hired for a year. But
mafters are not always willing to give their fervants a fettlement b^
hiring them in this manner; and fervants are hot always willing to
be fo hired, becaufe as every laft fettlement difcharges all the fore-
going, they might thereby lofe their original fettlement in the
places of their nativity, the habitation of their parents and re-
lations. , .

I lo jii33v G ebfiuoq nat }o in&fr»3rn?, r^ j-fM

No independent workman, it is evident, whether labourer or

artificer, is likely to gain any new fettlement either by apprentice-

fliip or by fervice. When fuch a perfon, therefore, carried his in-

duftry to a new parifli, he was liable to be removed, how healthy

and induftrious foever, at the caprice of any churchwarden or

overfeer, unlefs he either rented a tenement of ten pounds a year,

a thing impolTible for one who has nothing but his labour to live

by; or could give fuch fecurity for the difcharge of the parifh as

4 two

THE WEALTH OF NATIONS. 173

two juftices of the peace fhould judge fiifficient. What fccurity C H^A P.
they fliall require, indeed,, is left altogether to their difcretion; but u— v--^-
they cannot well require lefs than thirty pounds, it having been
ena6led, that the purchafe even of a freehold eftate of lefs than^
thirty pounds value, fhall not gain any perfon a fettlement, as not
being fufficient for the difcharge of the parifti. But this is a fe^
Gurity which fcarce any man who lives by labour can give ; and
much greater fecurity is frequently demanded.

In order to reftore in fome meafure that free circulation of labour
which thofe different flatutes had almoH: entirely taken away, the
invention of certificates was fallen upon. By the 8th and 9th of
William III. it was ena6led, that if any perfon fhould bring a certi-
ficate from the parifii where he was lafl: legally fettled, fubfcribed
by the churchwardens and overfeers of the poor, and allowed by
two juftices of the peace, that every other parifh fiiould be obliged
to receive him;, that he fhould not be removable merely upon ac-
count of his being likely to become chargeable, but only upon :
his becoming a6tually chargeable, ^ and that then the parifh which,
granted the certificate fhould be obliged to pay the expence both'
of his maintenance and of his removal. And in order to give the
moft perfe6l fecuiity to the parifh where fuch certificated man
fhould come to refide, it was further ena6led by the fame ftatute, ,
that he fhould gain no fettlement there by any means whatever, ,
except either by renting a tenement of ten pounds a year, or by
fer/ing upon his own account in an annual parifh office for one .■ -
whole year and confequently neither by notice, nor by fervice, ,
nor by apprenticefhip, nor by paying parifh rates. By the 12th; .
of Queen Anne too, ftat. i. c. 18. it was further enafted, that
neither the fervants nor apprentices of fuch certificated man fhould .
gain any fettlement in the parifh where he refided under fuch cerr-
tificate.

How

THE NATURE AND CAUSES OF

How far this invention has reilored that free circulation of
labour which the preceeding ftatutes had almoft entirely taken
away, we may learn from the following very judicious obfer-
vation of Doctor Burn. "It is obvious, fays he, that there are
** divers good reafons for requiring certificates with perfons com-

ing to fettle in anyplace; namely, that perfons refiding under
*' them can gain no fettleraent, neither by apprenticefhip, nor by
" fervice, nor by giving notice, nor by paying parifh rates; that
** they can fettle neither apprentices nor fervants; that if they
** become chargeable, it is certainly known whither to remove

them, and the parifh fhall be paid for the removal, and for
" their maintenance in the mean time; and that if they fall fick;
** and cannot be removed, the parifh which gave the certificate
" muft maintain them : None of all which can be without a cer-
" tificate. Which reafons will hold proportionably for pariOies

not granting certificates in ordinary cafes; for it is far more
" than an equal chance, but that they will have the certificated
" perfons again, and in a worfe condition." The moral of this
obfei-vation feems to be, that certificates ought always to be re-
quired by the pariQi where any poor man comes to refide, and
that they ought very feldom to be granted by that which he pro-
pofes to leave. There is fomewhat of hardfliip in this matter
** of certificates," fays the fame very intelligent author in his
Hiflory of the poor laws, ** by putting it in the power of a parifh
*' officer, to imprifon a man as it were for life; however incon-
*' venient it may be for him to continue at that place where he
<* has had the misfortune to acquire what is called a fettlement, or

whatever advantage he may propofe to himfelf by living elfe-
** where."

Though a certificate carries along with it no teftimonial of
good behaviour, and certifies nothing but that the i)er[on belongs

THE WEALTH OF NATIONS. 175

to the parifh to which he really does belong, it is altogether dif- CHAP,
cretionary in the parifli officers either to grant or to refufe it. A u-v— J
mandamus was onee moved for, fays Doctor Burn, to compel the
churchwardens and overfeers to fign a certificate; but the court ofi
King's Bench rejeded the mohon as a very ftrange attempt.

The very unequal price of labour which we frequently find hi
England in places at no great diftance from one another, is pro-
bably owing to the obflruftion which the law of fettlements gives
to a poor man who would cany his induftry from one parifh to-
another without a certificate. A fingle man, indeed, who is healthy
and induftrious, may fometimes refide by fufferance without one^
but a man with a wife and family who Ihould attempt to do {o,
would in moft pariflies be fure of being removed, and if the fmgle
man fliould afterwards marry, he would generally be removed
likewife. The fcarcity of hands in one parifli, therefore, cannot
always be relieved by their fuper- abundance in another, as it is
conftantly in Scotland, and, I believe, in all other countries where
there is no difficulty of fettlement. In fuch countries, though
wages may fometimes rife a little in the neighbourhood of a great
town, or wherever elfe there is an extraordinary demand for la-
bour, and fink gradually as the diftance from fuch places increafes^
till they fall back to the common rate of the country ; yet we never
meet with thofe fudden and unaccountable differences in the wages
of neighbouring places which we fometimes find in England, where
it is often more difficult for a poor man to pafs the artificial boun-
dary of a parifli, than an arm of the fea or a ridge of high^
mountains, natural boundaries which fometimes feparate very di«
ftin6lly different rates of wages in other countries.

To remove a man who has committed no mifdemeanour from,
the parifli where he chufes to refide, is an evident violation of na-
tural

176

THE^ NATURE AND CAUSES OF

B 0^0 K tiiral liberty and juftice. The common people of England, liow-
x^y-^ *ver, fo jealous of their Hbeity, but like the common people of
:inoft other countries never rightly underftanding wherein it con-
Jifts, have now for more than a century together fuffered them-

felves to be expofed to this oppreflion without a remedy. Though

men of reflection too have fometimes complained of the law of
vfettlements as a publick grievance; yet it has never been the

obje6l of any general popular clamour, fuch as that againft
.general warrants, an abufive pra6lice undoubtedly, but fuch
.a one as was not likely to occafion any general oppreflion.

There is fcarce a poor man in England of forty years of age, I
•will venture to fay, who has not in fome part of his life felt

himfelf moft cruelly oppreft by this ill contrived law of fettle-

ments.

I SHALL conclude this long chapter with obferving, that though
-anciently it was ufual to rate wages, firft by general laws extending
■over the whole kingdom, and afterwards by particular orders of
the ]u£Hces of peace in every particular county, both thefe prac-
tices have now gone intirely into difufe. " By the experience of
*** above four hundred years, fays Do6lor Burn, it feems time to
** lay afide all endeavours to bring under ftri6t regulations, what
•** in its own nature feems incapable of minute limitation : for
*' if all perfons in the fame kind of work were to receive equal
^' wages, there would be no emulation, and no room left for in-
^' duftry or ingenuity."

Particular a6ls of parliament, however, ftill attempt fome-
times to regulate wages in particular trades and in particular places.
Thus the 8th of George III. prohibits under heavy penalties all
•mafter taylors in London, and five miles round it, from giving,
and their workmen from accepting, more than two (hillings and

feven-

THE WEALTH OF NATIONS.

177

feven-pence halfpenny a day, except in the cafe Ox^ a general mourn- ^ H
ing. , Whenever the legiflature attempts to regulate the differences
between mafters and their workmen, its counfellors are always the
mafters. When the regulation, therefore, is in favour of the
workmen^it is always juft and equitable; but it is fometimes other-
wife when in favour of the mafters. Thus the law v/hich obliges
the mafters in feveral different trades to pay their workmen in mo-
ney and not in goods, is quite juft and equitable. It impofes no-
real hardfhip upon the mafters. It only obliges them to pay that
value in money, which they pretended to pay, but did not always
really pay, in goods. This law is in favour of the workmen;
but the 8th of George III. is in favour of the mafters. When
mafters combine together in order to reduce the wages of their
workmen, they commonly enter into a private bond or agreement,
not to give more than a certain wage under a certain penalty.
Were the workmen to enter into a contrary combination of the
fame kind, not to accept of a certain wage under a certain penalty,
the law would punifti them very feverely j and if it dealt impartially
it would treat the mafters in the fame manner. But the 8th of
George III. enforces by law that very regulation which mafters
fometimes attempt to eftablifti by fucfi combinations. The com-
plaint of the workmen, that it puts the ableft and moft indu-
ftrious upon the fame footing with an ordinary workman, feems
perfectly well founded.

In antient times too it was ufual to attempt to regulate the .
profits of merchants and other dealers, by rating the price both of
provifions and other goods. The affize of bread is, fo far as I
know, the only remnant of this ancient ufage. Where there is
an exclufive corporation, it may perhaps be proper to regulate the
price of the firft neceffary of life. But where there is none, the
competition will regulate it much better than any affize. The

Vol. I. A a method

178

THE NATURvE AND CAUSES OF

B 0^0 K method of fixing the affize of bread eftabhfhed by the jifl; of
' George II. could not be put in practice in Scotland, on account
of a defeft in the law; its execution depending upon the office of
■clerk of the market, which does not exift there. This defe6l was not
remedied till the 3d of George III. The want of an aflize oc-
' cafioned no fenfible inconveniency, and the eftabhfhment of one,
in the few places where it has yet taken place, has produced no
fenfible advantage. In the greater part of the towns of Scotland,
however, there is an incorporation of bakers who claim exclufive
privileges, though they are not very ftridly guarded.

The proportion between the different rates both ~ of wages and
profit in the different employments of labour and flock, feems
not to be much affefted, as has already been obferved, by the riches
or poverty, the advancing, flationary, or declining flate of the fociety.
Such revolutions in the pubHck welfare, though they afFe6l the general
rates both of wages and profit, mufl in the end affect them equally in
all different employments. The proportion between them, therefore,
mufl remain the fame, and cannot well be altered, at leafl for any
confiderable time, by any fuch revolutions.

' i-rtrmTB't -'Ji^rvi - '-Iff* ,

th;e wealth of nations. . ^79

CHAP. XI.

Of the Rent of Land,

RENT, confidered as the price paid for the ufe of land, is
naturally the higheft which the tenant can afford to pay in the w-y-— '
a61:ual circumftances of the land. In adj Lifting the terms of the
leafe, the landlord endeavours to leave him no greater fhare of the
produce than what is fufficient to keep up the ftock from which he
furnifhes the feed, pays the labour, and purchafes and main-
tains the cattle and other inftruments of hufoandry, together with
the ordinary profits of farming ftock in the neighbourhood. This is
evidently the fmalleft fliare with which the tenant can content himfelf
without being a lofer, and the landlord feldom means to leave him any
more. Whatever part of the produce, or, what is the fame thing,
whatever part of its price, is over and above this ftiare, he naturally
endeavours to referve to himfelf as the rent of his land, which is
evidently the higheft the tenant can afford to pay in the
a6lual circumftances of the land. Sometimes, indeed, the
liberality, more frequently the ignorance, of the landlord,
makes him accept of fomewhat lefs than this portion ; and
fometimes too, though more rarely, the ignorance of the tenant
makes him undertake to pay fomewhat more, or to content himfelf
with fomewhat lefs than the ordinary profits of farming ftock in,
the neighbourhood* This portion, however, may ftill be confidered .
as the natural rent of land, or the rent for which it is naturally
meant that land fliould for the moft part be lett. .

The rent of land, it may be thought, is frequently no more '
than a reafonable profit or intereft for the ftock laid out by the land-
lord upon its improvement. This, no doubt, may be partly the
cafe upon fome occafions; for it can fcarce ever be more than partly

Aa2 th^j

iSo

THE NATURE AND CAUSES OF

B O^O K the cafe. The landlord demands a rent even for unimproved land,

V. — , 1 and the fuppofed intereft or profit upon the expence of improvement

is generally an addition to this original rent. Thofe improvements,
bsfides, are not always made by the flock of the landlord, butfome-
tinies by that of the tenant. When the kafe comes to be renewed,
however, the landlord commonly demands the fame augmentation
of rent, as if they had been all made by his own.

He fometimes demands rent for what is altogether incapable of
human improvement. Kelp is a fpecies of fea-weed, v/hich, when
burnt, yields an alkaline fait, ufeful for making glafs, foap, and
for feveral other purpofes. It grows in feveral parts of Great
Britain, particularly in Scotland, upon fach rocks only as lie within
the high water mark, which are twice every day covered with the
fea, and. of which the produce, therefore, w^as never augmented
by human induftry. The landlord, however, whofe eftate is
bounded by a kelp fliore of this kind, demands a rent for it as much
as for his corn fields.

The fea in the neighbourhood of theiflands of Shetland is more
than commonly abundant in fifh, which make a great part of the fub-
fiftence of their inhabitants. But in order to profit by the produce of
the water, they mufl have a habitation upon the neighbouring land.
The rent of the landlord is in proportion, not to what the farmer
can make by the land, but to what he can make both by the land
and the water. It is partly paid in fea fifh ; and one of the very
few inflances in which rent makes a part of the price of that com-
modity, is to be found in that country.

The rent of land, therefore, confidered as the price paid for
the ufe of the land, is naturally a monopoly price. It is not at all
proportioned to what the landlord may have laid out upon the

improvement

THE WEALTH OF NATIONS

improvement of the land, or to what he can afford to take; but to C HA P.
what the farmer can afford to give. ^yVVJ

Such parts only of the produce of land can commonly be
brought to market of which the ordinary price is fufficient to replace
the flock which muft be employed in bringing them thither, together
with its ordinary profits. If the ordinary price is more than this, the
furplus part of it will naturally go to the rent of the land. If it is
not more, though the commodity may be brought to market, it can
afford no rent to the landlord. Whether the price is, or is not
more, depends upon the demand.

There are fome parts of the produce of land for which the
demand muft always be fuck as to afford a greater price than what
is fufficient to bring them to market j and there are others for
which it either may or may not be fuch as to afford this greater
price. The former muft always afford a rent to the landlord.
The latter fometimes may, and fometimes may not, according to
different circumftances.

Rent, it is to be obferved, therefore, enters into the compo-
fition of the price of commodities in a different way from wages
and profit. High or low wages and profit, are the caufes of high
or low price i high or low rent is the effe6l of it. It is becaufe high
or low wages and profit muft be paid, in order to bring a particular
commodity to market, that its j)rice is high or low. But it is be-
caufe its price is high or low ; a great deal more, or very little more,
or no more, than what is fufficient to pay thofe wages and
profit, that it affords a high rent, or a low rent, or no rent
at all.

The particular confideration, firft, of thofe parts of the produce
of land which always afford fome rent fecondly, of thofe whicli

fometimes

l82

THE NATURE AND CAUSES OF

B O^O K fometimes may and fometimes may not afford rent ; and, thirdly,
i_ ' of the variations which, in the different periods of improvement,
naturally take place, in the relative value of thofe two different forts
of rude produce, when compared both with one another, and with
manufa^ured commodities, will divide this chapter into three

Part I.

Of the Produce of Land which always affords Rent,

men, like all other animals, naturally multiply in proportion^
to the means of their fubliftence, food is always, more or lefs, .
in demand. It can always purchafe or comjnand a greater or fmaller
quantity of labour, and fomebody can always be found who is
willing to do fomething in order to obtain it. The quantity of
labour, indeed, which it can purchafe, is not always equal to what
it could maintain, if managed in the moft oeconomical manner^ .
on account of the high wages which are fometimes given to labour.
But it can always purchafe fuch a quantity of labour as it can
maintain, according to the rate at which that fort of labour is com-,
monly maintained in the neighbourhood. .

But land, in almoft any fituation, produces a greater quantity
of food than what is fufficient to maintain all the labour neceilary
for bringing it to market, in the moft liberal way in which that
labour is ever maintained. The furplus too is always more than
fufficient to replace the ftock which employed that labour, together
with its profits. Something, therefore, always remains for a rent :
to the landlord. 1, /

The moft defart moors in Norway and Scotland produce fome
fort of pafture for cattle, of which the milk and the increafe are

4, , always

THE WEALTH OF NATIONS.

185

always more than fufficient, not only to maintain all the labour C P.
neceflary for tending them, and to pay the ordinary profit to the '^■->-^
farmer or owner of the herd or flock ; but to afford fome fmall
rent to the landlord. The rent increafes in proportion to the good-
' nefs of the pafture. The fame extent of ground not only main-
tains a greater number of cattle, but as they are brought within
a fmaller compafs, lefs labour becomes requifite to tend them, and
to colle£l their produce. The landlord gains both ways ; by the in-
creafe of the produce, and by the diminution of the labour which
muft be maintained out of it.

The rent of land varies with its fertility, whatever be its pro-
duce, and with its fituation, whatever be its fertility. Land in the
neighbourhood of a town, gives a greater rent than land equally
fertile in a diftant part of the country. Though it may coft no more
labour to cultivate the one than the other, it muft always coft more
to bring the produce of the diftant land to market. A greater
quantity of labour, therefore, muft be maintained out of it ; and
the furplus, from which are drawn both the profit of the farmer
and the rent of the landlord, muft be diminiftied. But in remote
parts of the country the rate of profit, as has already been ftiown,
is generally higher than in the neighbourhood of a large town. A
fmaller proportion of this diminiflied furplus, therefore, muft be-
long to the landlord.

Good roads, canals, and navigable riv6rs, by diminiOiing the
expence of carriage, put the remote parts of the country more
nearly upon a level with thofc in the neighbourhood of the town.
They are upon that account t!ie greateft of all improvements. They
encourage the cultivation of the remote, which muft always be the
moft extenfive circle of the countiy. They are advantageous to
the town, by breaking down the monopoly of the country in its

neighbourhood.

j84

THE NATURE AND CAUSES OF

B O^O K neighbourhood. They are advantageous even to that part of the
country. Though they introduce fome rival commodities into the
old market, they open many new markets to its produce. Mono-
poly, befides, is a great enemy to good management, which can
never be univerfally eftablidied but in confequence of that free and
univerfal competition which forces every body to have recourfe to
it for the fake of felf-defence. It is not more tl:ian fifty years ago
that fome of the counties in the neighbourhood of London, peti-
tioned the parliament againft the extenfion of the turnpike roads
into the remoter counties. Thofe remoter counties, they pre-
tended, from the cheapnefs of labour, would be able to fell their
grafs and corn cheaper in the London market than themfelves,
and would thereby reduce their rents and ruin their cultivation.
Their rents, however, have rifen, and their cultivation has been
improved lince that time.

A CORN field of moderate fertility produces a much greater
quantity of food for man, than the beft pafture of equal extent.
Though its cultivation requires much more labour, yet the furplus
which remains after replacing the feed and maintaining all that
labour, is likewife much greater. If a pound of butcher's meat,
therefore, was never fuppofed to be worth more than a pound of
bread, this greater furplus would every where be of greater value,
and conftitute a greater fund both for the profit of the farmer
and the rent of the landlord. It feems to have done fo univerfally
in the rude beginnings of agriculture.

But the relative values of thofe two different fpecies of food,
bread and butcher's-meat, are very different in the different periods
of agriculture. In its rude beginnings, the unimproved wilds,
which then occupy the far greater part of the countiy, are all
abandoned to cattle. There is more butcher's-meat than bread,

7 and

THE WEALTH OF NATIONS.

and bread, therefore, is the food for which there is the greiteft
competition, and which confequently brings the greateil price.
At Buenos Ay res, we are told by Ulloa, four reals, one and
twenty pence halfpenny fterling, was, forty or fifty years ago, the
ordinary price of an ox, chofen from a herd of two or three hun-
dred. He fays nothing of the price of bread, probably becaufe he
found nothing remarkable about . it. An ox there, he fays, cofts
little more than the labour of catching him. But corn can no
where be raifed without a great deal of labour, and in a country
which lies upon the river Plate, at that time the dire6l road from
Europe to the filver mines of Potofi, the money price of labour
could not be very cheap. It is otherwife when cultivation is ex-
tended over the greater part of the country. There is then more
bread than butcher's-meat. The competition changes its dire6lion,
and the price of butcher's-meat becomes greater than the price
of bread.

By the extenfion befides of cultivation, the unimproved wilds
become infufhcient to fupply the demand for butcher's-meat. . A
great part of the cultivated lands muft be employed in rearing and
fattening cattle, of which the price, therefore, muft be fufficient to
pay, not only the labour neceflary for tending them, but the rent
which the landlord and the profit which the farmer could have
drawn from fuch land employed in tillage. The cattle bred upon
the moil uncultivated moors, when brought to the fame market,
are, in proportion to their weight or goodnefs, fold at the fame
price as thofe which are reared upon the moil improved land. The
proprietors of thofe moors profit by it, and raife the rent of their
land in proportion to the price of their cattle. It is not more than
a century ago that in many parts of the highlands of Scotland,
butchcr's-meat was as cheap or cheaper than even bread made of
oatmeal. The union opened the market of England to the high-

VoL. I. B b land

THE NATURE AND CAUSES OF

BOOK land cattle. Their ordinary price is at prefent about three times
-v^— greater than at the beginning of the century, and the rents of many
highland eftates have been tripled and quadrupled in the fame time.
In almoft every part of Great Britain a pound of the beft butcher's-
meat is, in the prefent times, generally worth more than two
pounds of the beft white bread ; and in plentiful years it is fome-
times worth three or four pounds.

It is thus that in the pi^ogrefe of improvement the rent and profit
of unimproved pafture come to be regulated in fome meafure by
the rent and profit of what is improved, and thefe again by tlie
rent and profit of corn. Corn is an annual crop. Butcher's-meat,.
a crop which requires four or five years to grow. As an acre of
land, therefore, will produce a much fmaller quantity of the one.
fpecies of food than of the otiier, the inferiority of the quantity muft.
be compenfated by the fuperiority of the price. If it was more than,
compenfated, more corn land would be turned into pafture j and
if it was not compenfated, part of what was in pafture would be.
brought back into corn.

7 mo

This equality,, however, between the rent and profit of grafs and
thofe of corn of the land of which the immediate produce is food
for cattle,, and of that of which the immediate produce is food for
men muft be underftood to take place only through the greater
part of thcL improved lands of a great country. In fome par-
ticular local fituations it is quite otherwife, and the rent and profit
of grafs are much fuperior to what can be made by corn.

Thus in the neighbourhood of a great town, the demand for
milk and for forage to horfes, frequently contribute, along with the
high price of butcher's-meat, to raife the value of grafs above
what may be called its natural proportion to that of corn. This
7 local

THE WEALTH OF NATIONS.

187

local advantage, it is evident, cannot be communicated to the lands
at a diftance,

Particttlar circumdances have fometimes rendered fome
countries fo populous, that the whole territory, like the lands in the
neighbourhood of a great town, has not been fufficient to produce
both the grafs and the corn neceffary for the fubfiftence of their
inhabitants. Their lands, therefore, have been principally em-
ployed in the produ6lion of grafs, the more bulky commodity, and
which cannot be fo eafdy brought from a great diftance ; and corn,
the food of the great body of the people, has been chiefly imported
from foreign countries. Holland is at prefent in this fituation, and
a confiderable part of antient Italy feems to have been fo during
the profperity of the Romans. To feed well, old Cato faid, as wc
are told by Cicero, was the firft and moft profitable thing in the
management of a private eftate ; to feed tolerably well, the fecond ;
and to feed ill, the third. To plough, he ranked only in the fourth
place of profit and advantage. Tillage, indeed, in that part of antient
Italy which lay in the neighbourhood of Rome, muft have been
very much difcouraged by the diftributions of corn which were fre-
quently made to the people, either gratuitoufly, or at a very low
price. This corn was brought from the conquered provinces, of
which feveral, inftead of taxes, were obliged to furnilli a tenth
part of their produce at a ftated price, about fixpence a peck, to
the republick. The low price at which this corn was diflributed
to the people, muft neceffarily have funk the price of what could
be brought to the Roman market from Latium, or the antient
territory of Rome, and muft have difcouraged its cultivation iti
that country.

In an open country too, of which tlie principal produce is corn,
a well eiiclofcd piece of grafs will freque3"vtly rent liigher than any

B h 2 corn

THE 'Nature and causes of

corn field in its neighbourhood. It Is convenient for the mainte-
nance of the cattle employed in the cultivation of the corn, and
its high rent is, in this cafe, not fo properly paid from the value of
its own produce, as from that of the corn lands which are culti-
vated by means of it. It is likely to fall, if ever the neighbouring
lands are compleatly enclofed. The prefent high rent of enclofed
land in Scotland feems owing to the fcarcity of enclofure, and will
probably laft no longer than that fcarcity. The advantage of en-
clofure is greater for paflure than for corn. It faves the labour of
guarding the cattle, which feed better too when they are not liable
to be diflurbed by their keeper or his dog.

But wliere there is no local advantage of this kind, the rent
and profit of corn, or whatever elfe is the common vegetable food
of the people, muft naturally regulate, upon the land which is
fit for producing it, the rent and profit of pafture.

The ufe of the artificial grafles, of turnips, carrots, cabbages^
and the other expedients which have been fallen upon to make an
equal quantity of land feed a greater number of cattle than when
in natural grafs, fhould fomewhat reduce, it might be expe6led>
the fuperiority which, in an improved country, the price of
butcher's-meat naturally lias over that of bread. It feems ac-
cordingly to have done fo ; and there is fome reafon for believing
that, at leaft in the London market, the price of butcher's meat
in proportion to the price of bread is a good deal lower in the
prefent times than it was in the beginning of the lafl cen---
tury.

In the appendix to the Life of prince Henry, Do6lor Birch
has given us an account of the prices of butcher's meat as com-
monly paid by that prince. It is there faid, that the four quarters

THE WEALTH OF NATIONS.

of an ox weighing fix hundred pounds ufually coll: him nine C HA P.

pounds ten Ihillings or thereabouts ; that is, thirty-one fliillings u — v-^^
and eight pence per hundred pounds weight. Prince Henry died
on the 6th of November, 1 6 1 2, in the nineteenth year of his age.

In March, 1764, there was a parliamentary enquiry into the
caufes of the high price of provifions at that time. It was then,,
among other proof to the fame purpofe, given in evidence by a
Virginia merchant, that in March, 1763, he had vi6lualled his
fhips for twenty-four or twenty-five fliilhngs the hundred weight
of beef, which he confidered as the ordinary price ^ whereas, in that
dear year he had paid twenty-feven (hillings for the. fame weight and
fort. This high price in 1764, is, however, four Ihillings and
eight-pence cheaper than the ordinary price paid by prince Henry ;
and it is the beft beef only, it muft be obferved, which is fit to be
falted for thofe diftant voyages. ^

The price paid by prince Henry amounts to 34^* P^r pound
weight of the whole carcafe, coarfe and choice pieces taken toge-
ther J and at that rate the choice pieces could , not have been fold
by retail for lefs than 44^^/. or 5 d. the pound.

In the parliamentary enquiry in 1764, the witnefi^es ftated tht
price of the choice pieces of the beft beef to be to the confumer 4 d.
} and 4^^/. the pound ; and the coarfe pieces in general to be from
feven farthings to 2.Ld. and 2 ^d. and this they faid was in
general one half-penny dearer than the fame fort of pieces had
ufually been fold in the month of March. But even this high
price is ftill a good deal cheaper than what we can well fup-
pofe, the ordinary retail price to have been, in the time of prince .;
Henry.

During

THE NATURE AND CAUSES OF

During the twelve firft years of the laft century, the average
price of the beft wheat at the Windfor market was i/, iSs, ^^d^
the quarter of nine Winchefter bufliels.

But in the twelve years preceeciing 1764, including that year,
tlie average price of the fame meafure of the beft wheat at the fame
market was 2/. i s, ()~d.

■nti

In the twelve firft years of the laft century, therefore, wheat
appears to have been a good deal cheaper, and butchers meat a
good deal dearer than in tlie twelve years preceeding 1764, in-
cluding that year.

In all great countries the greater part of the cultivated lands
are employed in producing either food for men or food for cattle.
The rent and profit of thefe regulate the rent and profit of all
other cultivated land. If any particular produce afforded lefs,
the land would foon be turned into corn or pafture ; and if any
afforded more, fome part of the lands in corn or pafture wouW
foon be turned to that produce.

Those produ6fions, indeed, which require either a greater
original expence of improvement, or a greater annual expence of
cultivation, in order to fit the land for them, appear commonly
to afford, the one a greater rent, the other a greater profit than
corn or pafture. This fuperiority, however, will feldom be found
to amount to more than a reafonable intereft or compenfation for
this fuperior expence.

In a hop garden, a fruit garden, a kitchen garden, both the
rent of the landlord, and the profit of the farmer, are generally
greater than in a corn or grafs field. But to bring the ground into

this

THE WEALTH OF NATIONS.

this condition requires more expence. Hence a greater rent be- C H A P»
comes due to the landlord. It requires too a more attentive and
fkilful management. Hence a greater profit becomes due to the
farmer. The crop too, at leaft: in the hop and fruit garden, is
more precarious. Its price, therefore, bcfides compenfating all
occafional loflfes, muft afford fomething like the profit of infu-
ranee. The circumftances of gardeners, generally mean, and always
moderate, may fatisfy us that their great ingenuity is not commonly
©ver-recompenfed. Their delightful art is pra6lifed by fo many
rich people for amufement, that little advantage is to be made
by thofc who pra£life it for profit ; becaufe the perfons who fliould
naturally be their befV cuflomers, fupply tliemfelves with all their
mofl precious produ6lions.

The advantage which the landlord derives from fueh improve-
ments feems at no time to have been greater than what was fuf-
ficient to compenfate the original expence of making them. In
the antient hufbandry, after the vineyard, a well watered kitchen
garden feems to have been the part of the farm which was fup-
pofed to yield the mofl valuable produce. But Democritus, who
wrote upon hufbandry about two thoufand years ago, and who
was regarded by the antients as one of the fathers of the art,
thought they did not aft wifely who enclofed a kitchen garden.
The profit, he faid, would not compenfate the expence of a flone
wall ; and bricks (he meant, I fuppofe, bricks baked in the fun)
mouldered with the rain, and the winter florm, and required
continual repairs. Columella, who reports this judgement of
Democritus, does not controvert it, but propofes a very frugal
method of enclofmg with a hedge of thorns and briars, which,
he fays, he had found by experience to be both a laiting and an
impenetrable fence ; but which, it feems, was not commonly known
in the time of Democritus. Palladius adopts the opinion of

Columella,

■192

THE NATURE AND CAUSES OF

B OO K Columella, which had -before been recommended by Varro. In
the judgement of thofe antient improvers, the' produce of a
kitchen garden had, it feems, been little more than fufficient to
pay the extraordinary culture and the expeiice of watering ; for
in countries fo near the fun, it was thought proper, in thofe times
as in the prefent, to have the command of a ftream of wa*er,
which could be conducted to every bed in the garden. Through
the greater part of Europe, a kitchen garden is not at prefent
fuppofed to deferve a better enclofure than that recommended by
Columella. In Great Britain, and fome other northern countries,
the finer fruits cannot be brought to pcrfc(fiicn but by the a/fif-
tance of a wall. Their price, therefore, in fuch countries rnuft
be fufficient to pay the expence of building and maintaining what
they cannot be had without. The fruit-wall frequently furrounds
.the kitchen garden, which thus enjoys the benefit cf an inclofure
which its own produce could feldom pay for.

That the vineyard, when properly planted and brought to
perfe6lion, was the moft valuable part of the farm, feems to have
■been an undoubted maxim in the antient agriculture, as it is in
■the modern through all the wine countries. But whether it wais
advantageous to plant a new vineyard, was a matter of difpute
among the antient Italian hufbandmen, as we learn from Colu-
mella. He decides, like a true lover of all curious cultivation,
in favour of the vineyard, and endeavours to fliow, by a com-
parifon of the profit and expence, that it was a moft advantageous
improvement. Such comparifons, however, between the profit
^nd expence -of new projects, are commonly very fallacious ; and
in nothing more fo than in agriculture. Had the gain aftually
made by fuch plantations been commonly as great as he imagined
it might have been, there could have been no difpute about it.
The fame point is frequently at this day a matter of controverfy
4 in

THE WEALTH OF NATIONS. 193

in the wine countries. Their writers on agriculture, indeed, the C HA. P.
lovers and promoters of high cultivation, feem generally difpofed u.-vW
to decide with Columella in favour of the vineyard. In France
the anxiety of the proprietors of the old vineyards to prevent
the planting of any new ones, feems to favour their opinion, and
to indicate a confcioufnefs in thofe who muft have the experience,
that this fpecies of cultivation is at prefent in |hat country more
profitable than any other. It feems at the fame time, how-
ever, to indicate another opinion, that this fuperior profit can
laft no longer than the laws which at prefent reftrain the free
cultivation of the vine. In 1731, they obtained an order of
council prohibiting both the planting of new vineyards, and the
i-enewal of thofe old ones of which the cultivation had been in-
terrupted for two years; without a particular permiflion from
the king, to be granted only in confequence of an information
from the intendant of the province, certifying that he had exa-
mined the land, and that it was incapable of any other culture.
The pretence of this order was the fcarcity of corn and pafture, and
the fuper- abundance of wine. But had this fuper-abundance been
real, it would, without any order of council, have effeclually
prevented the plantation of new vineyards, by reducing the profits of
this fpecies of cultivation below their natural proportion to thofe of
corn and pafture. With regard to the fuppofed fcarcity of corn
occafioned by the multiplication of vineyards, corn is no where
in France more carefully cultivated than in the wine provinces,
where the land is fit for producing it ; as in Burgundy, Guienne,
and the Upper Languedoc. The numerous hands employed in
the one fpecies of cultivation neceflTarily encourage the other, by
affording a ready market for its produce. To diminifii the number
.of thofe who are capable of paying for it, is furely a mofl unpromifing
expedient for encouraging the cultivation of corn. It is like the
Vol. I. C c pohcy

194 THE NATURE AND CAUSES OF

BO^OK policy which would promote agriculture by difcouraging manu*-
w-r^rs^ fa6tures.

The rent and profit of thofe produftions, therefore, which
require either a greater original expence of improvement in order
to fit the land for them, or a greater annual expence of culti-
vation, though often much fuperior to thofe of corn and pafture,
yet when they do no more than compenfate fuch extraordinary
expence, are in reality regulated by the rent and profit of thofe
common crops.

It fometimes happens, indeed, that the quantity of land
which can be fitted for fome particular produce, is too finall to-
fupply the effe6lual demand. The whole produce can be dif:-
pofed of to thofe who are willing to give fomewhat more than
what is fufficient to pay the whole rent* wages, and profit ne-
cefTary for raifing and bringing it to market, according to their
natural rates, or according to the rates at which they are paid
in the greater part of other cultivated land. The furplus part
of the price which remains after defraying the whole expence of
improvement and cultivation may commonly, in this cafe, and
in this cafe only, bear no regular proportion to the like furplus
in corn or pafture, but may exceed it in almoft any degree ; and-
the greater part joEtfjbis exeefs naturally goes to the rent of the;
landlord^o-x.^vii yd bsrio;

T^ftE ufual and natural proportion, for example, between the
rent and profit of wine and thofe of corn and pafture, muft be
imderftood to take place only with regard to thofe vineyards which
produce nothing but good common wine, fuch as can be raifed
almoft any where upon any light, gravelly, or fandy foil, and
wliich lias nothing to recommend it but its ftrength and wholefom-
7 nefs.

THE WEALTH OF NATIONS.

195

ircfs. It is with Aich vineyards only that the common land of the C H^A P.
country can be brought into competition j for with thofe of a J|
peculiar quality it is evident that it cannot.

The vine is more affefted by the difference of foils than any
other fruit tree. From fome it derives a flavour which no culture
or management can equal, it is fuppofed, upon any other. This
flavour, real or imaginary, is fometimes peculiar to the produce of
a few vineyards ; fometimes it extends through the greater part of
a fmall diflri6t, and fometimes through a confiderable part of a ■
large province. The whole quantity of fuch wines that is brought
to ^ market falls fliort of the effe6lual demand, or the demand of
thofe who would be willing to pay the whole rent, profit, and
wages neceffary for preparing and bringing them thither, according
to the ordinary rate, or according to the rate at which they are
paid in common vineyards. The whole quantity, therefore, can
be difpofed of to thofe who are willing to pay more, which necef-
farily raifes their price above that of common wine. The difference
is greater or lefs according as the fafhionablenefs and fcarcity of the
wine render the competition of the buyers more or lefs eager.
Whatever it be, the greater part of it goes to the rent of the land-
lord. For though fuch vineyards are in general more carefully
cultivated than moft others, the high price of the wine feems to
be, not fo much the effefl, as the caufe of this careful cultivation.
In fo valuable a produce the lofs occafioned by negligence is fo
great as to force even the mofl carelefs to attention. A fmall part
of this high price, therefore, is fufficient to pay the wages of the
extraordinary labour beftowed upon their cultivation, and the
profits of the extraordinary ftock which puts that labour intp
motion.

The fugar colonies pofTeffed by the European nations in the
Wefl Indies, may be compared to thofe precious vineyards. Their
. . C c 2 whole

THE NATURE AND CAUSES OF

whole produce falls fhort of the effectual demand of Europe, and
can be difpofed of to thofe who are willing to give more than what
is fufficient to pay the whole rent, profit, and wages neceflary for
preparing and bringing it to market, according to the rate at which
they are commonly paid by any other produce. In Cochin-china
the fineft wliite fugar commonly fells for three piaftres the quintal,,
about thirteen (hillings and fixpence of our money, as we are told
by Mr. Poivre, a very careful obferver of the agriculture of that
country. What is there called the quintal weighs from a hundred,
and fifty to two hundred Paris pounds, or a hundred and feventy—
five Paris pounds at a medium, which reduces the price of the
hundred weight Englifh to about eight ftiillings fterling,. not a.
fourth part of what is commonly paid for the brown or mulkavada'
fugars imported, from our colonies, and not a fixth part of whate:
is paid for the fineft white fugar.. The greater part of the culti--
vated lands in Cochin-china are employed in producing corn and:
rice, the food of the great body of the people. The refpe6live
prices of corn, rice, and fugar, are :here probably in the natural:
proportion, or in that which naturally takes place in the different-
crops of the greater part of cultivated land, and which recompences
the landlord and farmer,, as nearly as can be computed, according
to what is ufually the original expence of improvement and the
annual expence of cultivation. But in our fugar colonies the price
of fugar bears no fuch proportion to that of the produce of a rice -
or corn field either m Europe or in America, It is commonly faid
that a fugar planter expe6ls that the rum and the molafTes fhould;
defray the whole expence of his cultivation, and that his fugar
fhould be all clear profit. If this be true, for I pretend not tb>
affirm it, it is as if a corn farmer expelled to defray the expence.
of his cultivation with the chaff and the flraw, and that the grain
Ihould be all clear profit. We fee frequently focieties of merchants:
in London and other trading towns,, purchafe wafte lands in our

THE WEALTH OF* Wl^^T IONS'.

5igar colonies, which they expe6l to improve and cultivate with profit C H^A P.
by means of faftors and agents ; notwithftanding the great diftance < — y —
and the uncertain returns, from the defective adminiftration of
juftice in thofe countries. Nobody will attempt to improve and
cultivate in the fam.e manner the moft fertile lands of Scotland;
Ireland, or the corn provinces of North America; though from
the more exa6l adminift ration of juftice in thefe countries, more,
i^egular returns might be expelled. ' '

In Virginia and Maryland the cultivation of tobacco is pre^^
ferred, as more profitable, to that of corn. Tobacco might-
be cultivated with advantage through the greater part of Eu-
rope but in almoft every part of Europe it has become a prin^
cipal fubje^l of taxation, and to collect a tax from every
ferent farm in the country where this plant might happen to be?l
cultivated, would be more difficult, it has been fuppofed, than tO'
levy one upon its importation at the cuftom-houfe. The cultiva-
tion of tobacco has upon this account been moft abfurdly prohi-
bited through the greater part of Europe, which necefiarily gives su
fort of monopoly to the countries where it is allowed ; and as Vir-
ginia and Maryland produce the greateft quantity of it, they fliare
largely, though with fome competitors, in the advantage of this>
monopoly. The cultivation of tobacco, however, feems not tO'
be fo advantageous as that of fugar. I have never even heard of,
any tobacco plantation that was improved and cultivated, by the:
capital of merchants who refided in Great Britain, and our tobacco?;
colonies fend us home no fuch wealthy planters as we fee fre-'-j
quently arrive from our fugar iflands. Though from the preference-
given in thofe colonies to the cultivation of tobacco above that of
corn, it would appear that the effectual demand of Europe for.
tobacco is not compleatly fupplied, it probably is more nearly fo-
than that for fugar : And though the prefent price of tobacco is ii
probably more than fufficient to pay the whole rent, wages, and:

198

THE NATURE AND CAUSES OF

B 0^0 K profit necefTatry for preparing and bringing it to market, according
i— -v"-— to the rate at which they are commonly paid in corn land ; it muft
not be fo much more as the prefent price of fugar. Our tobacco
planters, accordingly, have fliewn the fame fear of the fuper-abun-
dance of tobacco, which the proprietors of the old vineyards in
France have of the fuper-abundance of wine. By a6t of afTembly
they have reftrained its cultivation to fix thoufand plants, fuppofed
to yield a thoufand weight of tobacco, for every negro between
fixteen and fixty years of age. Such a negro, over and above this
quantity of tobacco, can manage, they reckon, four acres of Indian
corn. To prevent the market from being overftocked too, they
liave fometimes, in plentiful years, we are told by Dr. Douglafs,
(I fufpe£t he has been ill informed) burnt a certain quantity
of tobacco for every negro, in the fame manner as the Dutch
are faid to do of fpices. If fuch violent methods are necelTary to
J^eep up the prefent price of tobacco, the faperior advantage of its
culture over that of corn, if it ftill has any, will not probably be
of long continuance, .

It is in this manner that the rent of the cultivated land, of
•which the produce is human food, regulates the rent of the greater
part of other cultivated land. No particular produce can long
afford lefs ; becaufe the land would immediately be turned to
another ufe : And if any particular produce commonly affords
more, it is becaufe the quantity of land which can be fitted for it is
too fmall to fupply the effeftual demand.

In Europe corn is the principal produce of land which ferves
immediately for human food. Except in particular fituations,
therefore, the rent of corn land I'egulates in Europe that of all
other cultivated land. Britain need envy neither the vineyards of
France nor the olive plantations of Italy. Except in particular

fituations.

THE WEALTH OF NATIONS; igi

fituations, the value of thefe is regulated by that of corn, in which C HA P.
the fertility of Britain is not much inferior to that of either of thofe l-^^^w
two countries.

, If in any country the common and favourite vegetable food of
tlie people fliould be drawn from a plant of which the moft com^
mon land, with the fame or nearly the fame culture, produced a
much greater quantity than the moft fertile does of corn, the
rent of the landlord, or the furplus quantity of food which would
remain to him, after paying the labour and replacing the ftock of
the farmer together with its ordinary profits, would necelfarily be
much greater. Whatever was the rate at which labour was com*-
monly maintained in that country, this greater furplus could always
maintain a greater quantity of it, and confequently enable the
landlord to purchafe or command a greater quantity of it. The
real value of his rent, his real power and authority, his command
of the neceflaries and conveniencies of life with which the labour
of other people could fupply him, would neceflarily be much
greater^

A RICE field produces a much greater quantity of food than tire
moft fertile corn field. Two crops in the year from thirty to
fi'Xty bufliels each, are faid to be the ordinary produce of an
acre. Though its cultivation, therefore, requires more labour,
a much greater furplus remains after maintaining ail that labour.
In thofe rice countries, therefore, where rice is the common and
favourite vegetable food of the people, and where the cultivators^ -
are chiefly maintained with it^ a greater fhare of this greater
furplus fliould belong to the landlord than in corn countries. In
Carolina, where the planters-, as in other Britifh colonies, are gene-
rally both farmers and landlords, and where rent confequently is.
confounded with profit, the cultivatipn of rice is found to be more

profitable-

THE NATUHE AND CAUSES OF

BOOK profitable than that of corn, though their fields produce only one
JU-'v^ crop in the year, and though, from the prevalence of the cuftoms

of Europe, rice is not there the common and favourite vegetable

•food of the people.

A GOOD rice field is a bog at all feafons, and at one feafon a
•bog covered with water. It is unfit either for corn, or pafture,
<or vineyard, or, indeed, for any other vegetable produce that is
A^ery ufeful to men : And the lands which are fit for thofe purpofes,
are not fit for rice. Even in the rice countries, therefore, the rent
of rice lands cannot regulate the rent of the other cultivated land
which can never be turned to that produce.

The food produced by a field of potatoes is not inferior in quan-
tity to that produced by a field of rice, and much fuperior to what
is produced by a field of wheat. Twelve thoufand weight of
potatoes from an acre of land is not a greater produce than two
thoufand weight of wheat. The food or folid nourifhment, in-
deed, which can be drawn from each of thofe two plants, is not
altogether in proportion to their weight, on account of the watery
nature of potatoes. Allowing, however, half the weight of this
■root to go to water, a very large allowance, fuch an acre of pota-
toes will ftill produce fix thoufand weight of folid nourifhment,
three times the quantity produced by the acre of wheat. An acre
of potatoes is cultivated with lefs expence than an acre of wheat ;
the fallow which generally preceeds the fowing of wheat, more
than compenfating the hoeing and other extraordinary culture
which is always given to potatoes. Should this root ever become
in any part of Europe, like rice in fome rice countries, the common
and favourite vegetable food of the people, fo as to occupy the
fame proportion of the lands in tillage which wheat and other forts
of grain for human food do at prefent, the fame quantity of culti-
vated

THE WEALTH OF NATIONS.

201

vited' knd would maintam a much greater number of people,
and the labourers being generally fed with potatoes, a greater k^ "^'^
furplus would remain after replacing all the ftock and main-
taining all the labour employed in cultivation. A greater fhare
of this furplus too would belong to the landlord. Population
would increafe, and rents would rife much beyond what they are
at prefent.

The land which is fit for pbtatoes. Is fit for almofi! every other
xifeful vegetable. If they occupied the fame proportion of culti-
vated land which corn does at prefent, they would regulate, in the
fame manner, the rent of the greater part of other cultivated
land.

In fome parts of Lancafhire it is pretended, I have been told,
that bread of oatmeal is a heartier food for labouring people than
wheatert bread, and I have frequently heard the fame do6lrine
held in Scotland. I am, however, fomewhat doubtful of the truth
of it. The common people in Scotland, who are fed with oat-
meal, are in general neither fo ftrong nor fo handfome as the fame
rank of people in England, who are fed with Wheaten bread.
They neither work fo well nor look fo well ; and as there is no!*
the fame difference between the people of faftiion in the two coun-
tries, experience would feem to fiiow, that the food of the com-
mon people in Scotland is not fo fuitable to the human conftitution
as that of their neighbours of the fame rank in Englaftd. But
it feenis to be otherwife with potatoes. The chairmen, porters,-
and' coalheavers in London, and thofe unfortunate women who
live by proftitution, the ftrongeft men and the moft beautiful wd-
m^n perhaps in the Britifli dominions, are faid to be, the greater
paiirt of them, from the lowefl: rank of people in Ireland, who
are generally fed with tliis root. No food- can"afix>rd a more de-

VoL. L D d cifive

502 THE NATURE AND CAUSES OF

BOOK cifive proof of its nourifhing quality, or of its being peculiarly
fuitable to the health of the human conftitution.

It is difficult to preferve potatoes through the year, and irnpof-.
fible to ftore them like corn, for two or three years together.
The fear of not being able to fell them before tliey rot, difcourages
their cultivation, and is, perhaps, the chief obftacle to their ever
becoming in any great country, like bread, the principal vegetable
food of all the different ranks of the people.

Part II.

Of the Produce of Land which fometmes does, and fometimes doe^:

not, afford Rent,

TJUMAN food feems to be the only produce of land which,
always and neceflarily affords fome rent to the landlord..
Other forts of produce fometimes may and fometimes may not, acr
cording to different circumftances.

After food, cloathing and lodging are the two. great wants of:
mankind.

Land in its original rude flate can afford the materials of cloath-^
ing and lodging to a much greater number of people than it cani
feed. In its improved flate it can fometimes feed a greater num-
ber of people than it can fupply with thofe materials, at leafl:
in the way in which they require them, and are willing to pay
for them. In the one flate, therefore, there is always a fuper-
abundance of thofe materials, which are frequently upon that;
account of little or no value. In the other there is often a fcarcity,
which neceffarily augments their value. In the one ftate agreat,

4 W^-^

THE WEALTH OP NATIONS.

part of them is thrown away as ufelefs, and the price of what Is u 'ed C
is confidered as equal only to the labour and expence of fitting it for ^
ufe, and can, therefore, afford no rent to the landlord. In the
other they are all made ufe of, and there is frequently a demand
for more than can be had. Somebody is alvvays willing to give
more for every part of them than what is fufficient to pay the
expence of bringing them to market. Their price, therefore,, can
always afford fome rent to the landlord.

The fkins of the larger animals were the original materials of
cloathing. Among nations of hunters and fhepherds, therefore,
whofe food confifts chiefly in the flefh of thofe animals, every man
by providing himfelf with food, provides himfelf with the mate-
rials of more cloathing than he can wear. If there was no foreign
commerce, the greater part of them would be thrown away as
things of no value. This was probably the cafe among the hunting
nations of North America, before their country was difcovered
by the Europeans, with whom they now exchange their furplus
peltry, for blankets, fire-arms, and brandy, which gives it fomc
value. In the prefent commercial ftate of the known world, the
moft barbarous nations, I believe, among whopi land property is
eftablifhed, have fome foreign commerce of this kind, and find
among their wealthier neighbours fuch a demand for all the ma-
terials of cloathing, which their land produces, and which can
neither be wrought up nor confumed at home, as raifes their price
above what it cofts to fend them thither. It affords, therefore,
fome rent to the landlord. When the greater part of the highland
cattle were confumed on their own hills, the exportation of their
hides made the moft confiderable article of the commerce of that
country, and what they were exchanged for afforded fome addition
to the rent of the highland eftates. The wool of England, which
in old times could neither be confumed nor wrought up at home,

D d 2 found

iP4 THE NATURE AND CAUSES OF

B OO K found a market in the then wealthier and more induftrious country
V— Y-r-* of Flanders, and its price afforded fomething to the rent of the land
which produced it. In countries not better cultivated than Eng-
land was then, or than the highlands of Scotland are now, and
which had no foreign commerce, the materials of cloathmg would
evidently be fo fuper-abundant, that a great part of them would
be thrown away as ufelefs, and no part could afford any rent to
the landlord.

The materials of lodging cannot always be tranfported to
fo great a diftance as thofe of cloathing, and do not fo readily
become an object of foreign commerce. When they arc fu-
per-abundant in the country which produces them, it fre-
quently happens, even in the prefent commercial flate of the
world, that they are of no value to the landlord. A good ftone
quarry in the neighbourhood of London would afford a confider-
able rent. In many parts of Scotland and Wales it affords none*
Barren timber for building is of great value in a populous and wellr
cultivated country, and the land which produces it, affords a con-
fiderable rent. But in many parts of North America the land-
lord would be mvich obliged to any body who w®uld carry away
the greater part of his large trees. In fome parts of the highlands
of Scotland the bark is the only part of the wood which, for want
of roads and water-carriage, can be fent to market. The timber
is left to rot upon the ground. When the materials of lodging
are fo fuper-abundant, the part made ufe of is worth only the
labour and expence of fitting it for that ufe. It affords no rent
to the landlord, who generally grants the ufe of it to whoever
takes the trouble of afking it. The demand of wealthier nations,
however, fometimes enables him to get a rent for it. The paving
of the ftreets of London has enabled the owners of fome barren
rocks on the coafl of Scotland to draw a rent from what never af-
7 forded

THE WEALTH OF NATIONS.

forded any before. The woods of Norway and of the coafts of C
the Baltick, find a market in many parts of Great Britain which u-
they could not find at home, and thereby afford fome rent to their
proprietors.

Countries are populous, not in proportion to the numbeif
of people whom their produce can cloath and lodge, but in pro-
portion to that of thofe whom it can feed. When food is pro-
vided, it is eafy to find the neceffaiy cloathing and lodging. But
though thefe are at hand, it may often be difficult to find food.
In fome parts even of the Britifh dominions what is called A
Houfe, may be built by one day's labour of one man. The fimpleft
fpecies of cloathing, the fkins of animals, requires fomewhat more
labour to drefs and prepare them for ufe. They do not, however,
require a great deal. Among favage and barbarous nations, a
hundredth or little more than a hundredth part of the labour of
the whole year, will be fiifficient to provide them with fuch cloath-
ing and lodging as fatisfy the greater part of the people. All the
©ther ninety-nine parts are frequently no more than enough to
provide them with food.,

BuT when by the improvement and cultivation of land the la-r
hour of one family can provide food for two, the labour of half the
fociety becomes fufficient to provide food for the whole. The
other half, therefore, or at leaft the greater part of them, can be
employed in providing other things, or in fatisfying the other wants .
and fancies of mankind. Cloathing and lodging, houfehold fur-
niture, and what is called Equipage, are the principal obje6ts of
the greater part of thofe wants and fancies. The rich man con-
fumes no more food than his poor neighbour. In quality it may
be very different, and to felecS and prepare it may require more
labour and art^ but in quantity it is very nearly the fame. But

compare

-2o6 THE "NATURE AND CAUSES OF

B OO K <:ompare the fpacious palace and great wardrobe of the one, with
c-'^y—.^j the hovel and the few rags of the other, and you will be fenfiblc
•that the difference between their cloathing, lodging, and houfe-
hold furniture, is almoft as great in quantity as it is in quality.
The defire of food is limited in every man by the narrow capacity
,.of the human ftomach ; but the defire of the conveniencies and
ornaments of building, drefs, equipage, and houfehold furniture,
feems to have no limit or certain boundary. Thofe, therefore,
who have the command of more food than they themfelves can
confume, are always willing to exchange the furplus, or, what
is the fame thing; the price of it, for gratifications of this other
kind. What is over and above fatisfying the limited defire, is
given for the amufement of thofe defires which cannot be fatisfied,
but feem to be altogether endlefs. The -poor, in order to obtain
food, exert themfeves to gratify thofe fancies of the rich, and to
obtain it more certainly, they vie with one another in the cheap-
nefs and perfedion of their work. The number of workmen in-
creafes with the increafing quantity of food, or with the growing
improvement and cultivation of the lands; and as the nature of
their bufinefs admits of the utmoft fubdivifions of labour, the
quantity of materials which they can work up, incrcafes in a much
greater proportion than their numbers. Hence arifes a demand
for every fort of material which human invention can employ,
either ufefully or ornamentally in building, drefs, equipage, or
houfehold furniture; for the fofllls and minerals contained in
the bowels of the earth; the precious metals, and the precious
ftones.

Food is in this manner, not only the original fource of rent,
but every other part of the produce of land which afterwards
affords rent, derives that part of its value from the improvement of
the powers of labour in producing food by means of the improve-
ment and cultivation of land.

Those

THE WEALTH OF NATIONS.

Those other parts of the produce of land, however, which CHAP,
aftei wards afford rent, do not afford it always. Even in improved —
and cultivated countries, the demand for them is not always fuch
as to afford a greater price than what is fufficient to pay the la-
bour, and replace, together with its ordinary profits, the ftock
which muft be employed in bringing them to market. Whether,
it is or is not fuch, depends upon different circumftances. .

Whf.ther a coal-mine, for example, can afford any rent,,
depends paitly upon its fertility, and partly upon its fituation,

A MINE of any kind may be faid to be either fertile or barren^
according as the quantity of mineral which can be brought from it
by a certain quantity of labour, is greater or lefs than what can
be brought by an equal quantity from the greater part of other
mines of the fame kind..

Some coal-mines advantageoufly fituated, cannot be wrought^
on account of their barrennefs. The produce does not pay the.
expence. They can afford neither profit nor rent.

There are fome of which the produce is barely fufficient to
pay the labou!-, and replace, together with its ordinary profits, the
ftock employed in worl.ing them. They afford fome profit to the:
undertaker of the work, but no rent to the landlord. They caa:
be wrought advantageoufly by nobody but the landlord, who beings
bimfelf undertaker of the work, gets the ordinary profit of the
capital which he employs in it. Many coal-mines in Scotland are-
wrought in this manner, and can be wrought in no other. The.
landlord will allow no body elfe to work them without paying fomej
rent, and no body can afford to pay any,.

GTHEB.i

208

THE NATURE AND CAUSES OF

BO^O K Other coal-mines in the feme country fufficiently fertile, can-
Li*-/-'-^ not be wrought on account of their fituation. A quantity of mineral
fufficient to defray the expence of working, could be brought
from the mine by the ordinary, or even lefs than the ordinary
quantity of labour : But in an inland country, thinly inhabited,
and without either good roads or water-carriage, this quantity
could not be fold.

Coals are a lefs agreeable fewel than wood : they are faid too to
be lefs wholefbme. The expence of coals, therefore, at the place
where they are confumed, muft generally be fomewhat lefs than
that of wood.

The price of wood again varies with the ftate of agricult-ure,
nearly in the fanie manner, and exa6lly for the fame reafon, as the
price of cattle. In its rude beginnings, the greater part of every
country is covered with wood, which is then a mere incumbrance of
no value to the landlord, who would gladly give it to any body for
the cutting. As agriculture advances, the woods are partly cleared
by the progrefs of tillage, and partly go to decay in confequence of
the increafed number of cattle. Thefe, though they do not increafe
in the fame proportion as corn, which is altogether the acquifition
of human induftry, yet multiply under the care and prote6tion of
men ; who ftore up in the feafon of plenty what may maintain
them in that of fcarcity, who through the whole year furnifh them
with a greater quantity of food than uncultivated nature provides
for them, and who by deftroying and extirpating their enemies,
fecure them in the free enjoyment of all that flie provides. Nu-
merous herds of cattle, when allowed to wander through the woods,
though they do not deftroy the old trees, hinder any young ones
from coming up, fo that in the courle of a century or two the
whole foreft goes to ruin. The fcarcity of wood then raifes its

price.

THE WEALTH OF NATIONS.

price. It affords a good rent, and the landlord fometimes finds C
that he can fcarce employ his befl: lands more advantageoufly than u
in growing barren timber, of which the greatnefs of the profit
often compenfates the latenefs of the returns. This feems in
the prefent times to be nearly the ftate of things in feveral parts
of Great Britain, where the profit of planting is found to be
equal to that of either corn or pafture. The advantage which
the landlord derives from planting, can no where exceed, at leaft
for any confiderable time, the rent which thefe could afford him ;
and in an inland country which is highly cultivated, it will fre-
quently not fall much fhort of this rent. Upon the fea-coaft of a
well improved country, indeed, if it can conveniently get coals
for fewel, it may fometimes be cheaper to bring barren timber for
building from lefs cultivated foreign countries, than to raife it at
home. In the new town of Edinburgh, built within thefe few
years, there is not, perhaps, a fingle ftick of Scotch timber.

Whatever may be the price of wood, if that of coals is fuch
that the expence of a coal-fire is nearly equal to that of a wood one,
we may be affared, that at that place, and in thefe circumftances,
the price of coals is as high as it can be. It feems to be fo in fomc
of the inland parts of England, particularly in Oxfordfhire, where
it is ufual, even in the fires of the common people, to mix coals
and wood together, and where the difference in the expence of thofe
two forts of fewel cannot, therefore, be very great.

Coals, in the coal countries, are every where much below this
higheft price. If they were not, they could not bear the expence
of a diftant carriage, either by land or by water. A fmall quantity
only could be fold, and the coal mafters and coal proprietors find
it more for their intereft to fell a great quantity at a price fome-
what above the loweff, than a fmall quantity at tlie higheff:. The

Vol. I. E e moft

210

THE NATURE AND CAUSES OF

mofl fertile coal-mine too, regulates the price of coals at all the
other mines in its neighbourhood. Both the proprietor and the
undertaker of the work find, the one that he can get a greater
rent, the other that he can get a greater profit, by fomewhat un-
derfelUng all their neighbours. Their neighbours are foon obliged
to fell at the fame price, though they cannot fo well afibrd it, and
though it always dimlnifhes, and fometimes takes away altogether
both their rent and their profit. Some works are abandoned al-
together ; others can afford no rent, and can be wrought only by the
proprietor.

The lowefl price at which coals can be fold for any confiderable
time, is like that of all other commodities, the price which is
barely fufficient to replace, together with its ordinary profits, the
ftock which mufl: be employed in bringing them to market. At a
coal-mine for which the landlord can get no rent, but which he
muft either work himfelf or let it alone altogether, the price of
coals muft generally be nearly about this price.

Rent, even where coals afford one, has generally a fmaller
fhare in their price than in that of moft other parts of the rude pro-
duce of land. The rent of an eftate above ground, commonly
amounts to what is fuppofed to be a third of the grofs produce;,
and it is generally a rent certain and independent of the occafional
variations in the crop. In coal-mines a fifth of the grofs produce
is a very great rent; a tenth the common rent, and it is feldom a
rent certain, but depends upon the occafional variations in the
produce. Thefe are fo great, that in a country where thirty years
purchafe is confidered as a moderate price for the property of a
landed eftate, ten years purchafe is regarded as a good price for
that of a coal-mine.

The

THE WEALTH OF NATIONS.

211

The value of a coal-mine to the proprietor depends frequently C HAP.
as much upon its fituation as upon its fertihty. That of a metallick ■>-
mine depends more upon its fertility, and lefs upon its fituation.
The coarfe, and ftill more the precious metals, when feparated from
the ore, are fo valuable that they can generally bear the expence of
a very long land, and of , the moll diftant fea-carriage. Their
market is not confined to the countries in the neighbourhood of
the mine, but extends to the whole world. The copper of Japan
makes an article in the commerce of Europe; the iron of Spain
in that of Chili and Peru. The filver of Peru finds its way, not .
only to Europe, but from Europe to China.

The price of coals in Weflmoreland or Shropfliire can have little
effect on their price at Newcaftle; and their price in the Lionnois
can have none at all. The produflions of fuch diftant coal-mines
can never be brought into competition with one another. But
the produ6lions of the mofl diftant metallick mines frequently
may, and in fa6l commonly are. The price, therefore, of the
coarfe, and ftill more that of the precious metals, at the moft
fertile mines in the world, muft necelTarily more or lefs afFecl their
price at every other in it. The price of copper in Japan mufl:
have fome influence upon its price at the copper mines in Europe.
The price of filver in Peru, or the quantity either of labour or of
other goods which it will purchafe there, muft have fome influence
on its price, not only at the filver mines of Europe, but at thofe
of China. After the difcovery of the mines of Peru," the filver
mines of Europe were, . the greater part of them, abandoned.
The value of filver was fo much reduced that their produce could
no longer pay the expence of working them, or replace, with a
profit, the food, cloaths, lodging, and other neceffaries which
were con fumed in that operation. This was the cafe too with the
mines of Cuba and St. Domingo, and even with the antient mines
of Peru, after the difcovery of thofe of Potofi.

E e 2 The

212

THE NATURE AND CAUSES OF

The price of every metal at every mine, therefore, being regulat-
ed in fome meafure by its price at the moft fertile mine in the v^orld
that is a6>ually w^rought, it can at the greater part of mines da
very little more than pay the expence of working, and can feldom
afford a very high rent to the landlord. Rent, accordingly,
feems at the greater part of mines to iiave but a fmall fhare in the
price of the coarfe, and a ftill fmaller in that of the precious
metals. Labour and profit make up the greater part of both.

A SIXTH part of the grofs produce may be reckoned the average
rent of the tin mines of Cornvval, the moft fertile that are known
in the world, as we are told by the Reverend Mr. Borlace,
vice-warden of the ftannaries. Some, he fays, afford more, and
fome do not afford fo much. A fixtli part of the grofs pro-
duce is the rent too of feveral very fertile lead mines in Scot*
land..

In the filver mines of Peru, we are told by Frezier and Ulloa,
the proprietor frequently exa61:s no other acknowledgement from
the undertaker of the mine, but that he will grind the ore at
his mill, paying him the ordinary multure or price of grinding..
The tax of the king of Spain, indeed, amounts to one-fifth of
the ftandard filver, which may be confidered as the real rent of
the greater part of the filver mines of Peru, the richeft which
are known in the world. If there was no tax, this fifth would
naturally belong to the landlord, and many mines might be
wrought which cannot be wrought at prefent, becaufe they can-
not afford this tax. The tax of the duke of Cornwal upon
tin is fuppofed to amount to more than five per cent, or one
twentieth part of the value ; and whatever may be his proportion
it would naturally too. belong to the proprietor of the mine, if tin
was duty free. But if you add one-twentieth to one fixth, you

will

THE WEALTH OF NATIONS.

213

will find that the whole average rent of the tin mines of Corn- C HA P;
wal, is to the whole average rent of the filver mines of Peru, u»-y-*H
as thirteen to twelve. The high tax upon filver too, gives much
greater temptation to fmuggling than the low tax upon tin, and
Irnuggling muft be much eafter in the precious than in the bulky
commodity. The tax of the king of Spain accordingly is faid
to be very ill paid, and that of the duke of Corn wal very well.
Rent, therefore, it is probable, makes a greater part of the price
of tin at the moft fertile tin mines, than it does of filver at the
moll fertile filver mines in the world. After replacing the flock
employed in working thofe different mines, together with its
ordinary profits, the refidue which remains to the proprietor
is greater it feems in the coarfe than in tlie precious metal.

Neither are the profits of the undertakers of filver mine^
commonly very great in Peru. The fame mofl refpe<5i:abie and
well infoi-med authors acquaint us that when any perfon under-
takes to work a new mine in Peru, he is univerfally looked upon
as a man deflined to bankruptcy and ruin, and is upon that ac-
count fliunned and avoided by every body. Mining, it feems, is
confidered there in the fame light as here, as a lottery in which
the prizes do not compenfate the blanks, though the greatnefs.
of fome tempts many adventurers to throw away their fortunes
in fuch unprofperous projcils.

As the fovereign, however, derives a confiderable part of his
revenue from the produce of filver mines, the law in Peru gives
eveiy poffible encouragement to the difcovery and working of
new ones. Whoever difcovers a new mine, is entitled to meafure
off two hundred and forty-fix feet in length, according to what
he fuppofes to be the direction of the vein, and half as much in
breadth. He becomes proprietor of this portion of the mine,

and

214

'THE NATURE AND CAUSES OF

B O^O K and can work it without paying any acknowledgement to the
c— v^— «j landlord. The intereft of the duke of Coinvval has given oc-
cafion to a regulation nearly of the fame kind in that antient
dutchy. In wafte and uninclofed lands any perfon who dif-
covers a tin mine, may mark out its limits to a certain extent,
which is called bounding a mine. The bounder becomes the real
proprietor of the mine, and may either work it himfelf, or give it
in leafe to another, without the confent of the owner of the land,
to whom, however, a very fmall acknovv^ledgement muft be paid
upon working it. In both regulations the facred rights of pri-
vate property are facrificed to the fuppofed interefls of publick
xe venue.

The fame encouragement is given in Peru to the difcovery and
working of new gold mines ; and in gold the king's tax amounts
only to a twentieth part of the ftandard metal. It was once a
fifth, as in filver, but it was found the work could not bear it.
If it is rare, however, fay tlie famie authors, Frezier and Ulloa,
to find a perfon who has made his fortune by a filver, it is ftill
much rarer to find one who has done fo by a gold mine. This
twentieth part feems to be the whole rent which is paid by the
greater part of the gold mines in Chili and Peru. Gold too
is much more liable to be fmuggled than even filver; not only
-on account of the fuperior value of the metal in proportion to
its bulk, but on account of the peculiar way in which nature
produces it. Silver is very feldom found virgin, but, like mofl
other metals, is generally mineralized with fome other body, from
which it is impoffible to feparate it in fuch quantities as will pay
for the expence, but by a very laborious and tedious operation,
which cannot well be carried on but in workhoufes creeled for
the purpofe, and therefore expofed to the infpeftion of the king's
£)f&cers. Gold, on the contrary, is almofl always found viigin. It is

fometimes

THE WEALTH OF NATIONS.

/bmctlmes found in pieces of fome bulk ; and even when mixed '
in fmall and almoft infenfible particles with fand, earth, and other '
extraneous bodies, it can be feparated from them by a very fliort
and fimple operation, which can be carried on in any private
houfe by any body who is poffcfled of a fmall quantity of mer-
cury. If the king's tax, therefore, is but ill paid upon fiiver,
it is likely to be much worfe paid upon gold; and rent muft
make a much fmaller part of the price of gold, than even of that
of filver.

The loweft price at which the precious metals can be fold, or
the fmalleft quantity of other goods for which they can be ex-
changed during any conliderable time, is regulated by the fame
principles which fix tlie loweft ordinary price of all other goods.
The ftock which muft commonly be employed, the food, cloaths^
and lodging, which muft commonly be confumed in bringing
them from the mine to the market, determine it. It muft at leaft.
be fufficient to replace that ftock, with the ordinary profits.

Their highe/1: price, however, feems not to be neceflarily deter-
mined by any thing but the a6lual fcarcity or plenty of thofe metals
tliemfelves. It is not determined -"by that of any other commo-
dity, in the fame manner as the price of coals is by that of wood,
beyond which no fcarcity can ever raife it. Increafe the fcarcity.
of gold to a certain degree, and the fmalleft bit of it may become
more precious than a diamond, and exchange for a greater quantity
of other goods.

The demand for thofe metals arifes partly from their utility, and'
partly from their beauty. If you except iron, they are more ufeful
than, perhaps, any other metal. As they are lefs liable to ruft
and impurity, they can more eafily be kept clean ; and the uten-

4 ^^^^

THE NATURE AND CAUSES OF

K fils either of the table or the kitchen are often upon that account
more agreeable when made of them. A filver boiler is more
cleanly than a lead, copper, or tin one; and the fame quality
would render a gold boiler ftill better than a fdver one. Their
principal merit, however, arifes from their beauty, which renders
them peculiarly fit for the ornaments of drefs and furniture. No
paint or dye can give fo fplendid a colour as gilding. The merit
of their beauty is greatly enhanced by their fcarcity. With the
greater part of rich people, the chief enjoyment of riches con-
fifts in the parade of riches, which in their eyes is never fo com-
pleat as when they appear to pofTefs thofe decifive marks of
opulence which nobody can pofiefs but themfelves. In their eyes
the merit of an objedt which is in any degree either ufeful or
beautiful, is greatly enhanced by its fcarcity, or by the great
labour which it requires to colle6t any confiderable quantity of
it, a labour which no body can afford to pay but themfelves. Such
objects they are willing to purchafe at a higher price than things
much more beautiful and ufeful, but more common. Thefe qua-
lities of utility, beauty, and fcarcity, are the original foundation
of the high price of thofe metals, or of the great quantity of
other goods for which they can every where be exchanged. This
value was antecedent to and independant of their being employed
as coin, and was the quality which fitted them for that employ-
ment. That employment, however, by occahoning a new de-
mand, and by diminifliing the quantity which could be employed
in any other way, may have afterwards contributed to keep up
or increafe their value.

The demand for the precious ftones arifes altogether from their
beauty. They are of no ufe, but as ornaments ; and the merit
of their beauty is greatly enhanced by their fcarcity, or by the
difficulty and expence of getting them from the mine, Wages

7 and

I - ■

THE WEALTH OF NATIONS.

and profit accordingly make up, upon moft occafions, almoft the
whole of their high price. Rent comes in but for a very fmali fhare ;
frequently for no (hare j and the moft fertile mines only afford any
confiderable rent. When Tavernier, a jeweller, vifited the dia-
mond mines of Golconda and Vifiapour, he was informed that the
fovereign of the country, for whofe benefit they were wrought,
had ordered all of them to be fhut up except thofe which yielded
the largeft and fineft ftones. The others, it feems, were to the
proprietor not worth the working.

As the price both of the precious metals and of the precious
ftones is regulated all over the world by their price at the moft
fertile mine in it, the rent which a mine of either can afford to its
proprietor is in proportion, not to its abfolute, but to what may be
called its relative fertility, or to its fuperiority over other mines of
the fame kind. If new mines were difcovered as much fuperior to
thofe of Potofi as they were fuperior to thofe of Europe, the value
of filver might be fo much degraded as to render even the mines of
Potofi not worth the working. Before the difcovery of the Spanifh
Weft Indies, the moft fertile mines in Europe may have afforded
as great a rent to their proprietor as the richeft mines in Peru do
at prefent. Though the quantity of filver was much lefs, it
might have exchanged for an equal quantity of other goods, and
the proprietor's fhare might have enabled him to purchafe or com-
mand an equal quantity either of labour or of commodities. The
value both of the produce and of the rent, the real revenue which
they afforded both to the publick and to the proprietor, might
have been the fame.

The moft abundant mines either of the precious metals or of the
precious ftones could add little to the wealth of the world. A pro-
duce of which the value is principally derived from its fcarcity, is

Vol. I, F f neceiTarily

2i8 THE NATURE AND CAUSES OF

B O^O K neceflaiily degraded by its abundance. A fervice of plate, and the
other frivolous ornaments of drefs and furniture, could be purchafed
for a fmaller quantity of labour, or for a fmaller quantity of com-
modities ; and in this would confift the fole advantage which the
world could derive from that abundance.

It is otherwife in eftates above ground. The value both of
their produce and of their rent is in proportion to their abfolute,
and not to their relative fertility. The land which produces a
certain quantity of food, cloaths and lodging, can always feed,
cloath and lodge a certain number of people; and whatever may be
the proportion of the landlotd, it will always give him a propor-
tionable command of the labour of thofe people, and of the com-
modities with which that labour can fupply him. The value of
the moft barren lands is not diminifhed by the neighbourhood of
the moft fertile. On the contrary, it is generally increafed by it.
The great number of people maintained by the fertile lands afford
a market to many parts of the produce of the barren, which they
eould never have found among thofe whom their own produce
could maintain.

Whatever increafes the fertility of land in producing food,
increafes not only the value of the lands upon which the improve-
ment is beftowed, but contributes Irkewife to increafe that of many
other lands, by creating a new demand for their produce. That
abundance of food, of which, in confequence of the improvement
of land, many people have the difpofal beyond what they them-
felves can confume, is the great caufe of the demand both for the
precious metals and the precious ftones, as v/ell as for every other
conveniency and ornament of drefs, lodging, houfhold furniture,
and equipage. Food not only conftitutes the principal part of the
riches of the world, but it is the abundance of food which gives

the

THE WEALTH OF NATIONS. 219

the principal part of their vakie to many other forts of riches.
The poor inhabitants of Cuba and St. Domingo, when they were vy'VVJ
firft difcovered by the Spaniards, ufed to wear little bits of gold as
ornaments in their hair and other parts of their drefs. They
feemed to value them as we would do any little pebbles of fome-
what more than ordinary beauty, and to confider them as juft worth
the picking up, but not worth the refufmg to any body who afked
them. They gave them to their new guefts at the firft requeft,
without feeming to think that they had made them any very valu-
able prefent. They were aftoniflied to obferve the rage of the
Spaniards to obtain them ; and had no notion that there could
any where be a country in which many people had the difpofal of
fo great a fuperfluity of food, fo fcanty always among themfelves,
that for a very fmall quantity of thofe glittering baubles they would
willingly give as much as might maintain a whole family for many
years. Could they liave been made to underftand this, the paflion
of the Spaniards would not have furprifed them.

Part III.

Of the Variations in the Proportiofz between the refpeBive Values of
that Sort of Produce which always affords Renty and of that which
fometimes does a?id fometimes does not afford Rent,

'TpHE increafing abundance of food, in confequence of in-
creafing improvement and cultivation, muft neceflarily increafe
the demand for every part of the produce of land which is not
food, and v»'hich can be applied either to ufe or to ornament. In
the whole progrefs of improvement, it might therefore be expected,
there ftiould be only one variation in the comparative values of
thofe two different forts of produce. The value of that fort which
fometimes does and fometimes does not afford rent, lliould con-
ftantly rife in proportion to that which always, affords fome rent.

F f 2 As

ii?Q THE NATURE AND CAUSES OF

B Q^G K As.^rt and induftry advance, the materials of cloathing and lodg-
ir^"-*^ ing, the ufeful foflils and minerals of the earth, the precious metals
and the precious ftones fhould gradually come to be more and
more in demand, ftiould gradually exchange for a greater and a
greater quantity of food, or in other words, fhould gradually be-
come dearer and dearer. This accordingly has been the cafe with
molt of thefe things upon moft occafions, and would have been
the cafe with all of them upon all occafions, if particular accidents
had not upon fome occafions increafed the fupply of fome of them
in a ftill greater proportion than the demand.

The value of a free-ftone quarry, for example, will neceffarily
increafe with the increafing improvement and population of the
country round about it ; efpecially if it fhould be the only one in
the neighbourhood. But the value of a filver mine, even though
there fliould not be another within a thoufand miles of it, will not
necefTarily increafe with the improvement of the country in which
it is fituated. The market for the produce of a free-flone quarry
can feldom extend more than a few miles round about it, and the
demand mufl generally be in proportion to the improvement and
population of that fmall diflri6l. But the market for the produce
of a filver mine may extend over the whole known world. Unlefs
the world in general, therefore, be advancing in improvement and
population, the demand for filver might not be at all increafed by
the improvement even of a large country in the neighbourhood of
the mine. Even though the world in general were improving,
yet, if in the courfe of its improvement, new mines fhould be dif-
covered, much more fertile than any which had been known before,
though the demand for filver would necefTarily increafe, yet the
fupply might increafe in fo much a greater proportion, that the
real price of that metal might gradually fall ; that is, any given
quantity, a pound weight of it, for example, might gradually
4 purchafe

THE WEALTH OF NATIONS

221

purchafe or command a fmaller and a fmaller quantity of labour,' C H^A P.
or exchange for a fmaller and a fmaller quantity of corn, the prin- *—-»-■■
cipal part of the fubfiftence of the labourer.

The great market for filver is the commercial and civilized part
of the world.

If by the general progrefs of improvement the demand of this
market fliould increafe, while at the fame time the fupply did not
increafe in the fame proportion, the value of filver would gradually
rife in proportion to that of corn. Any given quantity of filver
would exchange for a greater and a greater quantity of corn j or,
in other words, the average money price of corn would gradually
become cheaper and cheaper.

If, on the contrary, the fupply by fome accident fhould increafe ■
for many years together in a greater proportion than the demand,
that metal would gradually become cheaper and cheaper ^ or, in
other words, the average money price of corn would, in fpite of.
all improvements, gradually become dearer and dearer.

But if, on the other hand, the fupply of that metal fhould in-*
creafe nearly in the fame proportion as the demand, it would ;
continue to purchafe or exchange for nearly the fame quantity of
/ corn, and the average money price of corn would, in fpite of all
improvements, continue very nearly the fame.

These three feem to exhauft all the pofTible combinations of
events which can happen in the progrefs of improvement ; and
during the courfe of the four centuries preceeding the prefent, if
we may judge by what has happened both in France and Great
Britain, each of thofe three different combinations feems to have

taken

.22 THE NATURE AND CAUSES OF

BOOK taken place in the European market, and nearly in the fame order
w-v^-^ too in which I have here fet them down.

DigrcJ/ian concerning the Variations in the Value of Silver during the
Courfe of the Four laji Centuries.

First Period.

tN 1350, and for fome time before, the average price of the
quarter of wheat in England feems not to have been eftimated
lower than four ounces of filver Tower-weight, equal to about
twenty (hillings of our prefent money. From this price it feems to
have fallen gradually to two ounces of filver, equal to about ten
fhillings of our prefent money, the price at which we find it efti-
mated in the beginning of the fixtecnth century, and at which it
feems to have continued to be eftimated till about 1570.

In 1350, being the 25th of Edward III, was enafled what is
called. The ftatute of labourers. In the preamble it complains
much of the infolence of fervants, who endeavoured to raife their
wages upon their mafters. It therefore ordains, that all fervants
and labourers fliould for the future be contented with the fame
v;ages and liveries (liveries in thofe times fignihed, not only cloaths,
but provifions) which they had been accuftomed to receive in the
2cth year of the king, and the four preceeding years j that upon
this account their livery wheat fhould no where be eftimated higher
than ten-pence a bufliel, and that it ftiould always be in the option
of the mafter to deliver them either the wheat or the money.
Ten-pence a bufliel, therefore, had in the 25th of Edward II f,
been reckoned a very moderate price of wheat, fince it required a
particular ftatute to obHge fervants tp accept of it in exchange for
7 their

THE WEALTH OF NATIONS.

223

their ufual Uvery of provifions ; and it had been reckoned a rea- C HA P.
fonable price ten years before that, or in the i6th year of the king, v-— ,r--«;
the term to which the ftatute refers. But in the i6th year of
Edward III, ten -pence contained about half an ounce of filver
Tower- weight, and was nearly equal to half a crown of our prefent
money. Four ounces of filver. Tower- weight, therefore, equal
to fix fhillings and eight-pence of the money of thofe times, and
to near twenty fhillings of that of the prefent, muft have been
reckoned a moderate price for the quarter of eight bufliels.

This ftatute is furely a better evidence of what was reckoned in
thofe times a modei'ate price ot grain, than the prices of fome par-
ticular years, which have generally been recorded by hiftorians
and other writers on account of their extraordinary dearnefs or
eheapnefs, and from which, therefore, it is difficult to form any
judgement concerning what may have been the ordniary price.
There are, befides, other reafons for believing that in the begin-
ning of the fourteenth century, and for fome time before, the com-
mon price of wheat was not lefs than four ounces of filver the
quarter, and that of other grain in proportion-.

In 1309, Ralph de Born, prior of St. Auguftine's Canterbury,.,
gave a feaft upon his inftallation day, of which William Thorn,
has preferved, not only the bill of fare, but the prices of many
particulars. In that feaft were confumed, ift, fifty-three quarters
of wheat, which coft nineteen pounds, or feven fhillings and two-
pence a quarter, equal to about one and twenty ftiiilings and fix-
pence of our prefent money: adly; Fifty- eight quarters of malt,
which coft feventeen pounds ten fhillings, or fix fhillings a quarter,,
equal to about eighteen fliillings of our prefent money : 3dly,
Twenty quarters of oats, which coft- four pounds, or four fhillings
a quarter, equal, to about twelve fhillings of our prefent money;

The-

THE NATURE AND CAUSES OF

B O^O K The prices of malt and oats feemhere to be higher than their ordi-
c- -f nary proportion to the price of wheat.

These prices are not recorded on account of their extraordinaiy
-dearnefs or cheapnefs, but are mentioned accidentally as the prices
a6lually paid for large quantities of grain confumed at a feaft which
•was famous for its magnificence.

In 1262, being the 51ft of Henry III, was revived an ancient
Iftatute called, 'The Ajfize of Bread and Ale y which, the king fays
in the preamble, had been made in the times of his progenitors fome-
time kings of England. It is probably, therefore, as old at leaft
as the time of his grandfather Henry II, and may have been as
old as the Conqueft. It regulates the price of bread according as
the prices of wheat may happen to be, from one fliilling to twenty
(hillings the quarter of the money of thofe times. But ftatutes of
this kind are generally prefumed to provide with equal care for all
deviations from the middle price, for thofe below it as well as for
thofe above it. Ten fhillings, therefore, containing fix ounces of
filver Tower-weight, and equal to about thirty fhilhngs of our
prefent money, muft upon this fuppofition have been reckoned the
middle price of the quarter of wheat when this ftatute was firft
€na6led, and muft have continued to be fo in the 51ft of Henry
III. We cannot therefore be very far wrong in fuppofing that the
middle price was not lefs than one-third of the higheft price at
which this ftatute regulates the price of bread, or than fix fliillings
and eight-pence of the money of thofe times, containing four
ounces of filver Tower-weight.

From thefe different fads, therefore, we fcem to have fome
reafon to conclude, that about the middle of the fourteenth century,
«nd for a confiderable time before, the average or ordinary price

THE WEALTH OF NATIONS.

of the quarter of wheat was not fuppofed to be lefs than four ounces C HA p.
of lilver Tower- weight, u-*y-^

From about the middle of the fourteenth to the beghinlng of
the fixteenth century, what was reckoned the reafonable and mode-
rate, that is the ordinaiy or average price of wheat, feems to have
funk gradually to about one-half of this price ; fo as at laft to have
fallen to about two ounces of filver Tower- weight, equal to aboiit
ten fhillings of our prefent money. It continued to be ellimatcd at
this price till about 1570.

In the houftiold book of Henry, the fifth Earl of Northum-=
berland, drawn up in 151 2, there are two different eftimations of
wheat. In one of them it is computed at fix fhiilings and eight-
pence the quarter j in the other at five fliillings and eight-pence
only. In 15 12, fix fhiilings and eight-pence contained only two
ounces of filver Tower-weight, and were equal to about ten fliil-
lings of our prefent money, *

From the 25th of Edward III, to the beginning of the reign of
Elizabeth, during the fpace of more than two hundred years, fix
fliillings and eight-pence, it appears from feveral different ftatutes,
had continued to be confidered as what is called the moderate and
reafonable, that is the ordinary or average price of wheat. The
quantity of filver, however, contained in that nominal fum was,
during the courle of this period, continually diminifliing, in con-
fequence of fome alterations which were made in the coin. But
the incieafe of the value of filver had, it feems, fo far compenfiited
the diminution of the quantity of it contained in the fame nominaf
fum, that the legiflatui'e did not think it worth while to attend to
this^ circumiiance.

Vol. I.

G g

Thus

226

THE NATURE AND CAUSES OF

Thus in 1436 it was enaded, that wheat might be exported
without a licence when the price was fo low as fix fhillings and
eight- pence : And in 1463 it was enafted, that no wheat fhould
be imported if the price was not above fix fliillings and eight-pence
the quarter. The legiflature had imagined, that when the price
was fo low, there could be no inconveniency in exportation, but
that when it rofe higher, it became prudent to allow of impor-
tation. Six fhillings and eight-pence, therefore, containing about
the fame quantity of filver as thirteen fliillings and four-pence of
our prefent money, (one-third part lefs than the fame nominal fum
contained in the time of Edward III.), had in thofe times been con-
fidered as what is called the moderate and reafonable price of
wheat.

In 1554) by the ift and 2d of Philip and Mary ; and in 1558,
by the ift of Elizabeth, tlie exportation of wheat was in the fame
manner prohibited, whenever the price of the quarter fliould exceed
fix fhillings and eight-pence, which did not then contain two penny
worth more filver than the fame nominal fum does at prefent. But
it had foon been found that to reftrain the exportation of wheat
till the price was fo very low, was, in reality, to prohibit it altoge-
ther. In 1562, therefore, by the 5th of Elizabeth, the exportation
of wheat was allowed from certain ports whenever the price of the
quarter fhould not exceed ten fhillings, containing nearly the fame
quantity of filver as the like nominal fum does at prefent. This
price had at this time, therefore, been confidered as what is called
the moderate and reafonable price of v/heat. It agrees nearly with
the eflimation of the Northumberland book in 1 512.

That in France the average price of grain was, in the fame
manner, much lower in the end of the fifteenth and beginning of
the fixteenth century, than in the two centuries preceeding, has

±. been

THE WEALTH OF NATIONS.

227

been obferved both by Mr. Duprede St. Maur, and by the elegant C HA P.

author of the Eflay on the pohce of grain. Its price, during the v— >
fame period, had probably funk in the fame manner through the
greater part of Europe.

This rife in the value of filver in proportion to that of corn;
may either have been owing altogether to the increafe of the demand
for that metal, in confequence of increafing improvement and cul-
tivation, the fupply in the mean time continuing the fame as
before : Or, the demand continuing the fame as before, it may
have been owing altogether to the gradual diminution of the fupply ;
the greater part of the mines which were then known in the world,
being much exhaufted, and confequently the expence of working
them much increafed : Or it may have been ov/ing partly to the
one and partly to the other of thofe two circumflances. In the end
of the fifteenth and beginning of the fixteenth centuries, the greater
part of Europe was approaching towards a more fettled form of go-
vernment than it had enjoyed for feveral ages before. The increafe of
fecurity would naturally increafe induftry and improvement ; and the
demand for the precious metals, as well as for every other luxury
and ornament, would naturally increafe with the increafe of riches.
A greater annual produce would require a greater quantity of coin
to circulate it j and a greater number of rich people would require a
greater quantity of plate and other ornaments of filver. It is natural
to fuppofe too, that the greater part of the mines which then fup-
plied the European market with filver, might be a good deal ex-
haufted, and have become more expenfive in the working. They
had been wrought many of them from the time of the Romans.

It has been the opinion, however, of the greater part of thofe
who have written upon the prices of commodities in antient
times, that, from the Conquefl, perhaps from the invafion of

G g 2 Julius

«28

THE NATURt AND CAUSES OF

BOOK Julius Cselar till the difeovery of the mines of America, tlie value
W-v--*-' of filver was continually climinifhing. This opinion they feem to-
have been led into, partly by the obfervations which they had occafion
to make upon the prices both of corn and of fame other piarts of
the rude produce of land ; and partly by the popular notion, that
as the quantity of filver naturally increafes in every country
with the increafc of wealth, fo its value diraiiuflies as its quantity
increafes.

In their obfervations upon the prices of corn, three different cir-
cumftances feem frequently to have milled them.

First, In antient times almoft all rents were paid in kind'^
in a certain quantity of corn, cattle, poultry, &c. It fometimes
happened, however, that the landlord would ftipulate with the
tenant, that he fliould be at liberty to demand either the annual
payment in kind, or a certain fum of money inftead of it. The
price at which the payment in kind was in this manner exchanged
for a certain fum of money, is in Scotland called the converfion
price. As the option is always in the landlord to take either the
fubftance or the price, it is necelTary for the fafety of the tenant,
that the converfion price Ihould rather be below than above the.
average market price. In many places, accordingly, it is not much
above one-half of this price. Through the greater part of Scotland
this cuftom ftill continues with regard to poultry, and in fome
plac-es with regard to cattle. It might probably have continued
to take place too with regard to corn, had not the inftitution
of the pubhck fiars put an end to it. Thefe are annual valu-
ations, according to the judgement of an aflize, of the average
price of all the different forts of grain, and of all the dif-
ferent qualities of each, according to the adual market price
in every different county. This inftitution rendered it fufficiently
fafe for the tenant, and much more convenient for the landlord,

.to

THE WEALTH OF NATIONS.

229

to convert, as they call it, the corn rent at the price of the fiars of C HA P.
each year, rather than at any certain fixed price. But the writers u —
who have colle6ted the prices of corn in antient times, feem fre-
quently to have miftaken what is called in Scotland the converfion
price for the a6tual market price. Fleetwood acknowledges upon
one occafion that he had made this mrftake. As he wrote his book,
however, for a particular purpofe, he does not think proper
to make this acknowledgement till after tranfcribing this converfion
price fifteen times. The price is eight fliillings the quarter of
wheat. This fum in 1423, the year at which he begins with it^
contained the fame quantity of filver as fixteen fhillings of our pre-
fent money. But in 1562, the year at which he ends with it, it con-
tained no more than the fame nominal fum does at prefent.

Secondly, They have been milled by the flovenly manner in
which fome antient ftatutes of affize had been fometimes tranfcribed
by lazy copiers ; and fometimes perhaps a6lually eompofed by the
legiflature.

The antient ftatutes of affize feem to have begun always with de-
termining v^hat ought to be theprice of breadand ale whentheprice of
wheat and barley were at the loweft, and to have proceeded gradually
to determine what it ought to be according as the prices of thofe
two forts of grain fhould gradually rife above this loweft price.
But the tranfcribers of thofe ftatutes feem frequently to have thought
it fufficient to copy the regulation as far as the three or four firfb
and loweft prices i faving in this manner their own labour, and
judging, I fuppofe, that this was enough to {how what proportion
ought to be obferved in all higher prices*

Thus in the affize of bread and ale, of the 51ft of Henry IIL
the price of bre^d^ jj^as, regulated according to tlie different prices of

wheat.

2.0 THE NATURE AND CAUSES OF

SO OK wheat, fpom one {liilling to twenty fhillings the quarter, of the
L — ^ <nioney of thofe times. But in the manufcripts from which all the
■different editions of the ftatutes, preceeding that of Mr. Ruffhead,
were printed, the copiers had never tranfcribed this regulation be-
.yond the price of twelve fliillings. Several writers, therefore, being
jnifled by this faulty tranfcription, very naturally concluded that the
• middle price, or fix fliillings the quarter, equal to about eighteen
-fliillings of our prefent money, was the ordinary or average price of
wheat at that time.

In the fl:atute of Tumbrel and Pillory, ena6led nearly about the
-fame time, the price of ale is regulated according to every fixpence
rife in the price of barley, from two fliillings to four fliillings the
quarter. That four fliillings, however, was not confidered as the
Jiighefl: price to which barley might frequently rife in thofe times,
and that thefe prices were only given as an example of the proportion
which ought to be obferved in all other prices, whether higher or
lower, we may infer from the lafl: words of the fl:atute; ** et fic
** deinceps crefcetur vel diminuetur per fex denarios." The ex-
.preflion is very flovenly, but the meaning is plain enough j
That the price of ale is in this manner to be incrcafed or di-
miniflied according to every fixpence rife or fall in the price of
barley." In the compofition of this fliatute the legiflature itfelf
feems to have been as negligent as the copiers were in the tranfcription
of the other.

In an antient manufcript of the Regiam Majeftatem, an old
:Scotch law book, there is a flatute -of affize, in which the price of
bread is regulated according to all the different prices of wheat, from
ten-pence to three fhillings the Scotch boll^ equal to about half an
Englifli quarter. Three fliillings Scotch, at the time when this
^afTize is fuppofed to have been enaCled, were equal to about nine

fliillings

THE WEALTH OF NATIONS.

fliillings fterling of our prefent money. Mr. Rudiman feems to C
conclude from this, that three fhiUings was the higheft price to c-
which wheat ever rofe in thofe times, and that ten-pence, a fhiUing,. .
or at moft two (liiUings, were the ordinary prices. Upon con-
fulting the manufcript, however, it appears evidently, that all thefe
prices are only fet down as examples of the' proportion which ought-
to be obferved between the refpeftive prices of wheat and bread.
The laft words of the ftatute are, reliqua judicabis fecundum
** prsefcripta habendo refpedlum ad premium bladi." *' You fhalL
judge of the remaining cafes according to what is above written^
5' having a refpe6l to the price of corn."

Thirdly, They feem to have been mifled too by the very low
price at which v*^heat was fometimes fold in very antient times ;
and to have imagined, that as its loweft price was then much
lower than in later times, its ordinary price muft likewife have
been much lower. They might have found, however, that in thofe
antient times, its higheft price was fully as much above, as its
loweft price was below any thing that had ever been known in later'
times. Thus in 1270, Fleetwood gives us two prices of the quarter
of wheat. The one is four pounds fixteen fhillings of the money
of thofe times, equal to fourteen pounds eight fhillings of that of the
prefent ; the other is fix pounds eight fhillings, equal to nineteen
pounds four fhillings of our prefent money. No price can be found
in the end of the fifteenth, or beginning of the fixteenth century,
which approaches to the extravagance of thefe. The price of corn,
though at all times liable to variations, varies moft in thofe tur-
bulent and diforderly focieties, in which the interruption of all
commerce and communication hinders the plenty of one part of the
countiy from relieving the fcarcity^ of another. In the diforderly
ftate of England under the Plantagenets, who governed it from
about the middle of the twelfth, till towards the end of the fifteenth

century.

THE NATURE AND CAUSES OF

B O^O K century, one diftri£l might be in plenty, while another at no great
c— ^ diftance, by having its crop deftroyed either by feme accident of the
leafons, or by the incurfion of fome neighbouring baron, might be
Tuffering all the horrors of a famine ; and yet if the lands of fome
hoftile lord were interpofed between them, the one might not be
able to give the leall: affiftance to the other. Under the vigorous ad-
miniftration of the Tudors, who governed England during the latter
part of the fifteenth, and through the whole of the fixteenth century,
no baron was powerful enough to dare to difturb the publick
fecurity.

The reader will find at the end of this chapter all the prices of
wheat which have been colle6led by Fleetwood from 1 202 to 1 597,
both inclufive, reduced to the money of the prefent times, and
digefted according to the order of time, into feven divifions of
twelve years each. At the end of each divifion too, he will find
the average price of the twelve years of which it confifts. In that
long period of time, Fleetwood has been able to colledV the prices
of no more than eighty years, fo that four years are wanting to
make out the laft twelve years. I have added, therefore, from the
accounts of Eton college, the prices of 1598, 1599, 1600, and
160 r. It is the only addition which I have made. The reader
will fee that from the beginning of the thirteenth till after the
middle of the fixteenth century, the average price of each twelve
years grows gradually lower and lower ; and that towards the
end of the fixteenth century it begins to rife again. The prices,
indeed, which Fleetwood has been able to colle6t, feem to have
been thofe chiefly which were remarkable fon extraordinary dear-
nefs or cheapnefs j and I do not pretend that any very certain con-
clufipn caii be drawn from them. So far, however, as they prove
any thing at all, tliey confirm the account which I have been ai-
deavouring to give. Fleetwood himfelf, however, feems, with
mofl. other writers, to have believed, that during all this period the

value

XpE WEALTH OF NATIONS.

value of filver, in confequence of its increafing abundance, was C
continually diminifliing. The prices of corn which he himfeif has
collected, certainly do not agree with this opinion. They agree
perfe6lly with that of Mr. Dupre de St. Maur, and with that
which I have been endeavouring to explain. Bifliop Fleetwood
and Mr. Dupre de St. Maur are the two authors who feem
to have colle6led, with the greateft diligence and fidelity, the
prices of things in antient times. It is fomewhat curious that,
though their opinions are fo very different, their fa6ls, fo far
as they relate to the price of corn at leaft, fliould coincide fo very
exadly.

It is not, however, fo much from the low price of corn, as from
that of fome other parts of the rude produce of land, that the molt
judicious writers have inferred the great value of filver in thofe very
antient times. Corn, it has been faid, being a fort of manufaclure,
was, in thofe rude ages, much dearer in proportion than the greater
part of other commodities ; it is meant, I fuppofe, than the greater
part of unmanufactured commodities, fuch as cattle, poultry, game
of all kinds, 6cc. That in thofe times of poverty and barbarifni
thefe were proportionably much cheaper than corn, is undoubtedly
true. But this cheapnefs was not the effect of the high value of
filver, but of the low value of thofe commodities. It was not that
filver would in fuch times purchafe or reprefent a greater quantity of
labour, but that fuch commodities would purchafe or reprefent a
much fmaller quantity than in times of more opulence and im-
provement. Silver muft certainly be cheaper in Spanifh America
than in Europe ; in the country where it is produced, than in the
country to which it is brought, at the expence of a long carriage
both by land and by fea, of a freight and an infurance. One and
twenty pence halfpenny fterling, however, we are told by UUoa,
was, not many years ago, at Buenos Ayres, the price of an ox

Vol. I. H h chofen

234

THE NATURE AND' VIWseV OF

BO^OK chofen from a herd of three or four hundred. Sixteen fhillings
-v--^ fteriing, we are told by Mr. Byron, was the price of a good horfe-
in the capital of Chili. In a country naturally fertile, but of
which the far greater part is altogether uncultivated, cattle, poul-
try, game of all kinds, &c. as they can be acquired with a
very fmall quantity of labour, fo they will purchafe or command
but a very fmall quantity. The low money price for which they
may be fold, is no proof that the real value of filver is
there very high, but that the real value of thofe commodities i&
very low.

Labour, it muft always be remembered, and not any particular
commodity or fett of commodities, is the real meafure of the value
both of filver and of all other commodities.

But in countries almoft wafte, or but thinly inhabited, cattle,
poultry, game of all kinds, &c. as they are the fpontaneous pro-
du6lions of nature, fo flie frequently produces them in much greater
quantities than the confumption of the inhabitants requires..
In fuch a ftate of things the fupply commonly exceeds the demand.
In different ftates of fociety, in different ftages of improvement,
therefore, fuch commodities will reprefent, or be equivalent to, very
difi'erent quantities of labour.

In every flate of fociety, in every flage of improvement, corn is
the production of human indiiflry. But the average produce of
every fort of induftry is always fuited, more or Icfs exactly, to
the average confumption ; the average fupply to the average demand.
In every different flage of improvement befides, the raifing of equal
quantities of corn in the fame foil and climaLe, will, at an average,
require nearly equal quantities of labour; or what comes to the
fame thing, the price of nearly equal quantities; the continual in-

creafe

^ THE WEALTH OF NATIOI^JS. 235

creafc of the productive powers of labour in an improving (late of C
cultivation, being more or lefs counter-balanced by the continually y;;--^
increafmg price of cattle, the principal infti'uments of agriculture.
Upon all thefe accounts, therefore, we may reft afllired, that equal
quantities of corn will, in every ft-ate of fociety, in every ftage of
improvement, more nearly reprefent, or be equivalent to, equal
quantities of labour, than equal quantities of any other part of the
rude produce of land. Corn, accordingly, it has already been ob-
feived, is, in all the different ftages of wealth and improvement, a
more accurate meafure of value than any other commodity or fett
of commodities. In all thofe different ftages, therefore, we can
judge better of the real value of filver, by comparing it with corn,
than by comparing it with any other commodity, or fett of com*
modities. * ,

Corn, befides, or whatever elfe is the common and favourite
vegetable food of the people, conftitutes, in every civilized country,
the' principal part of the fubfiftence of the labourer. In confe-
quence of the extenfion of agriculture, the land of every country
produces a much greater quantity of vegetable than of animal food,
and the labourer every where lives chiefly upon the wholefome
food that is cheapeft and moft abundant. Butcher's-meat, except
in the moft thriving countries, or where labour is moft highly
rewarded, makes but an infignificant part of his fubfiftence :
poultry makes a ftill fmaller part of it, and game no part of it.
In France, and even in Scotland, where labour is fomewhat
better rewarded than in France, the labouring poor feldom eat
butcher's - meat, except upon holidays, and other extraordi-
nary occafions. The money price of labour, therefore, de-
pends much more upon the average money price of corn, the
fubfiftence of the labourer, than upon that of butcher's-meat, or
of any other part of the rude produce of land. The real value pf

H h 2 gold

236 THE^ NATURE AND C AUSES OF

BOOK gold and filver, therefore, the real quantity of labour which they can
/- ■ purchafe or command, depends much more upon the quantity of
corn which they can purchafe or command, than upon that of
butcher's- meat, or any other part of the rude produce of land.

. Such flight obfervatlons, however, upon the prices either of corn or

of other commodities, would not probably have mifled fo many
intelligent authors, had they not been agreeable to the popular
notion, that as the quantity of filver naturally increafcs in every
country with the increafe of wealth, fo its value diminiflies as
its quantity increafes. This notion, however, feems to be altogether
groundlefs.

The quantity of the precious metals may increafe in any country
from two different caufes : either, firft, from the incrcafed abun-
dance of the mines which fupply it ; or, fecondly, from the increafed
wealth of the people, from the increafed produce of their annual,
labour. The firft of thele caufes is no doubt neceflarily conne6led
with the' diminution of the value of the precious metals j; but the.
fecond is not.

When more abundant mines are difcovered, a greater quantity
©f the precious metals is brought to market, and the quantity of
the neceflaries and conveniencies of life for which they rauft be
exchanged being the fame as before, equal quantities of the metals
muft be exchanged for fmaller quantities of commodities. So far,
therefore, as the increafe of the quantity of the precious metals in
any countiy arifes from the increafed abundance of the mines,
it is necelTarily conne6ted with fome diminution of their value.

When, on the contrary, the wealth of any country increafes,
when the annual produce of its labour becomes gradually greater

4 and

THE WEALTH OF NATIONS.

and greater, a greater quantity of coin becomes neceflary in order
to circulate a greater quantity of commodities; and the people,
as they can afford it, as they have more commodities to give for it,
will naturally purchafe a greater and a greater quantity of plate.
The quantity of their coin will increafe from neceffity; the quantity
of their plate from vanity and oftentation, or from the fame reafon
that the quantity of fine flatues, pi6lures, and of every other
luxury and curiofity, is likely to encreafe among them. Bat as
ftatuaries and painters are not likely to be worfe rewarded in times
of wealth and profperity, than in times of poverty and depreflion,
ib gold and fdver are not likely to be worfe paid for.

The price of gold and filver, when the accidental difcovery of
more abundant mines does not keep it down, as it naturally rifes
with the wealth of every country, fo, whatever be the flate of
the mines, . it is at all times naturally higher in a rich than in a
poor country. Gold and filver, like all other commodities, na-
turally feek the. market where the heft price is given for them, and
the bed price is commonly given for every thing in the country
which can beft afford it. Labour, it muft be remembered, is
the ultimate price which is paid for every thing, and in countries
where labour is equally well rewarded, the money price of labour,
will be in proportion to that of the fubfiftence of the labourer.
But gold and filver will naturally exchange for a greater quantity of
fubfiftence in a rich than in a poor country, in a country which i
abounds with fubfiftence, than in one which is but indifferently fup-
plied with it. If the two countries are at a great diflance, the dif--
ference may be very great; becaufe though the metals naturally;
fly from the worfe to the better market, yet it may be difficult to -
tranfport them in fuch quantities as to bring their price nearly to .
a level in both. If the countries are near, the difference will be ,
fmaller, and may fome times be fcarce |x;rceptible; becaufe in this .

cafe J

237

C H A P.

,38 THE NATURE AND CAUSES OF

BOOK cafe the tranfportation will be eafy. China is a much richer coun-
^.—yL^ try than any part of Europe, and the difference between the price of
fubfiftence in China and in Europe is very great. Rice in China
is much cheaper than wheat is any whei e in Europe. England
is a much richer country than Scotland j but the difference between
the money price of corn in thofe two countries is much fmaller,
and is but juft perceptible. In proportion to the quantity ^or
meafure, Scotch corn generally appears to be a good deal cheaper
than Englifh 3 but in proportion to its quality, it is certainly fome-
what dearer. Scotland receives almoft every year very large fup-
plies from England, and every commodity muft commonly be
foraewhat dearer in the country to which it is brought than in
that from which it comes. Enghfh corn, therefore, muff be dearer
in Scotland than in England, and yet in proportion to its quality,
or to the quantity and goodnefs of the flour or meal which can
be made from it, it cannot commonly be fold higher there than
the Scotch corn which comes to market in competition with it.

The difference between the money price of labour in China and
in Europe, is flill greater than that between the money price of
fubfiflencci becaufe the real recompence of labour is higher in
Europe than in China, the greater part of Europe being in an
improving flate, while China feems to be ftanding flill. The mo-
ney price of labour is lower in Scotland than in England, becaufe
the real recompence of labour is much lower; Scotland, though
advancing to greater wealth, advancing much more flowly than
England. The proportion between the real recompence of labour
in different countries, it mufl be remembered, is naturally regu-
lated, not by their actual wealth or poverty, but by their advanc-
ing, ilationary, or declining condition.

Gold and filver, as they are naturally of the greatefl value among
the richefl, fo they are naturally of leafl value among the pooreft
7 nations.

THE WEALTH OF NATIONS.

239

nations. Among favages, the pooreft of all nations, they are of C H^A P.
icarce any value. v. — >

In great towns corn is always dearer than in remote parts of
the country. This, however, is the efFe6l, not of the real cheap-
nefs of filver, but of the real dearnefs of corn. It does not coft
lefs labour to bring filver to the great town than to the remote
parts of the country; but it cofts a great deal more to bring
corn.

In fome very rich and commercial countries, fuch as Hol-
land and the teriitory of Genoa, corn is dear for the fame reafon
that it is dear in great towns. They do not produce enough to
maintain their inhabitants. They are rich in the induftry and {kill of
their artificers and manufa6lurers ; in every fort of machinery which
can facilitate and abridge labour; in fhipping, and in all the other
inftruments and means of carriage and commerce : but they are
poor in corn, which, as it muft be brought to them from diftant
countries, mufl, by an addition to its price, pay for the carriage
from thofe countries. It does not coft lefs labour to bring filver to
Amfterdam thin to Dantzick; but it cofts a great deal more to
bring corn. The real coft of filver muft be nearly the fame in
both places; but that of corn muft be very different. Diminifti
the real opulence either of Holland or of the territoi'y of Genoa,
while the number of their inhabitants remains the fame ; diminifti
their power of fupplying themfelves from diftant countries; and
the price of corn, inftead of finking with that diminution in the
quantity of their filver, which muft neceffarily accompany this de-
clenfion either as its caufe or as its effe6t, will rife to the price of
^ famine. When we are in want of necefiaries we muft part with
all fuperfluities., of which the value, as it rifes in times of opulence -
and profperity, fo it links in times of poverty and diftrefs. It is

otherwife

:4o THE NATURE AND CAUSES OF

BOOK otherwife with necefiaries. Their real price, the quantity of
labour which they can purchafe or command, rifes in times of
^ poverty and diftrefs, and fmks in times of opulence and prof-
perity, which are always times of great abundance j for they
could not otherwife be times of opulence and profperity. Corn
is a neceffaiy, filver is only a fuperfluity.

Whatever, therefore, may have been the increafe in the quan-
tity of the precious metals, which, during the period between the
middle of the fourteenth and that of the fixteenth century,
-arofe from the increafe of wealth and improvement, it could have
no tendency to diminifh their value either in Great Britain, or
in any other part of Europe. If thofe who have colIe6led the
prices of things in ancient times, therefore, had, during this pe-
riod, no reafon to infer the diminution of the value of filver, from
any obfervations which they had made upon the prices either of
corn or of other commodities, they had ftill lefs reafon to infer it
from any fuppofed increafe of wealth and improvement.

Second Period.

Tg U T how various foever may have been the opinions of the
learned concerning the progrefs of the value of filver during
this firft period, they are unanimous concerning it during the
fccond.

From about 1570 to about 1640, during a period of about fe-
venty years, the variation in the proportion between the value of
filver and that of corn, held a quite oppofite courfe. Silver funk
in its real value, or would exchange for a fmaller quantity of la-
bour than before; and corn rofe in its nominal price, and inftead

THE WEALTH OF NATIONS.

of being commonly fold for about two ounces of filvcr the quarter,
or about ten fliillings of our prefent money, came to be fold for
fix and eight ounces of filver the quarter, or about thirty and forty
fliillings of our prefent money.

The difcovery of the abundant mines of America, feems to have
been the fole caufe of this diminution in the value of filver in pro-
portion to that of corn. It is accounted for accordingly in the
fame manner by every body; and there never has been any difpute
either about the fadt, or about the caufe of it. The greater,part of
Europe was, during this period, advancing in induftry and im-
provement, and the demand for filver muft confequently have been
increafing. But the increafe of the fupply load, it feems, fo far
exceeded that of the demand, that the value of that metal funk
confiderably. The difcovery of the mines of America^ it is to
be obferved, does not feem to liave had any very fenfible effe6l
upon the prices of things in England till after 1 570 j though
€ven the mines of Potofi had been difcovered more than thirty
years before.

Frqm 1595 to I $20, both inclufive, the average price of the
quarter of nine bufhels of the beft wheat at Windfor market, ap-
pears, from the accounts of Eton College, to have been 2I. i s,
6d. From which fum, negled:ing the fraftion, and deducing
a ninthj or 4 s. 7 d. 4, the price of the quarter of eight bufheis
comes out to have been 1 1, 16 s. 10 d. -i. And from this fum,
negle6ling hkewifethe fraction, and deducing a ninth, or 4s. id.^,
for the difference between the price of the bell wheat, and that of
the middle wheat, the price of the middle wheat comes out to
have been about 1 1. 12 s. 8d. 4> or about fix ounces and one-
third of an ounce of filver.

CHAP.
XI.

1^ y * tj

Vol. I.

From

THE NAT^RJE AND CAUSES OF

^ From 1 62 1 to 1636, both incUifive, the average price of the
fame meafure of the beft wheat at the fame market, appears, from
the fame accounts, to have been 2I. 10 s.; from which making
the Uke dedu6lions as in the foregoing cafe, the average price of
the quarter of eight buftiels of middle wheat comes out to have
been i 1. 19 s. 6 d, or about feven ounces and two-thirds of an
ounce of filver. , ^^^^

"-i^HdJ snin

Third Period. m -t-^vn

gETWEEN 1630 and 1640, or about 1636, the Med: of the
difcovery of the mines of America in reducing the value of filver,
appears to have been compleated, and the value of that metal feems
never to have funk lower in proportion to that of corn than it
was about that time. It feems to have rifen fomewhat in the
courfe of the prefent century, and it had probably begun to do fo
even fome time before the end of the laft.

From 1637 to 1700, both mclufive, being the fixty-four laft
years of the laft century, the average price of the quarter of nine
buftiels of the beft wheat at Windfor market, appears, from the
fame accounts, to have been 2I. 11 s. od. ^; which is only Is. od. .!.
dearer than it had been during the fixteen years before. But in
the courfe of thefe fixty-four years there happened two events-
which muft have produced a much greater fcarcity of corn fhan
what the courfe of the feafons would otherwife have occafioned,
and which, therefore, without fuppofmg any further redudion
in the value of filver, will much more than account for thie very,
fmall enhancement of price. .^ j^ u.^^. . -6-

The firft of thefe events was the civil Vvfar, which, by difcourag-
ing tillage and interrupting commerce, muft have raifed the price

THE WEALTH OF NATIONS.

of corn much above' what tlie^'edufre of the feafons would otherw'fe
have occafioned. It muft have had this effea: more or lefs at all
the different markets in the kingdom, but particularly at thofe in
the neighbourhood of London, which require to be fupplied from
the greateft diftance. In 1648, accordingly, the price of the
beft wheat at Windfor market, appears, from the fame accounts,
to have been 4I. 5 s. and in 1649 to have been 4I. the quarter of
nine bufhels. The excefs of thofe two years above 2I. 10 s. (the
average price of the fixte'en years preceding 1637) is 3 1. 5 s.; which
divided among the fixty-four laft years of the laft century, will
alone very nearly account for that fmall enhancement of price
which feems to have taken place in them. Thefe, however, though
the higheft, are by no means the only high prices which feem to
have been occafioned by the civil wars.

The fecond event was the bounty upon the exportation of corn
granted in 1688. The bounty, it has been thought by many
people, by encouraging tillage, may, in a long courfe of years,
have occafioned a greater abundance, and confequently a greater
cheapnefs of corn in the home-market than what would otherwife
have taken place there. But between i688 and 1700, it had no
time to produce this effeft. During this fhort peiiod its only ef-
. fe6l muft have been, by encouraging the exportation of the furplus
produce of every year, and thereby hindering the abundance of
one year from compenfating the fcarcity of another, to raife the
price in the home-market. The fcarcity which prevailed in Eng-
land from 1693 to 1699, both inciufive, though no doubt prin-
cipally owing to the badnefs of the feafons, and, therefore, extend-
ing through a confiderable part of Europe, muft have been fome-
what enhanced by the bounty. In 1699, accordingly, the further
exportation of corn was prohibited for nine months.

I i 2

There

THE NATURE AND CAUSES OF

BO^OK There was a third event which occurred in the courfeof the
fame period, and which, though it could not occafion any fcarcity
of corn, nor, perhaps, any augmentation in the real quantity of
filver which was ufually paid for it, muft neceffarily have occa-
fion ed fome augmentation in the nominal fum. This event was
tlie great degradation of the filver coin, by clipping and wearing.
This evil had begun in the reign of Charles II. and had gone on
continually increafmg till 1695J at which time, as we may learn
from Mr. Lowndes, the current filver coin was at an average, near
five and twenty per cent, below its ftandard value. But the nomi-
nal fum which conftitutes the market price of every commodity is
neceffarily regulated, not fo much by the quantity of filver, which,
according to the ftandard, ought to be contained in it, as by that
which, it is found by experience, actually is contained in it. This
nominal fum, therefore, is neceffarily higher when the coin is
much degraded by clipping and wearing, than when near to its
ftandard value.

In the courfe of the prefent century, the filver coin has not at
aiiy time been more below its ftandard weight than it is at prefent.
But though very much defaced, its value has been kept up by that
of the gold coin for which it is exchanged. For though before the
late re-comage, the gold coin was a good deal defaced too, it was
lefs fo than the filver. In 1695, on the contrary, the value of
the filver coin was not kept up by the gold coin ; a guinea then
commonly exchanging for thirty fhillings of the woin and dipt
filver. Before the late re-coinage of the gold, the price of filver
bullion was feldom higher than five ftiillings and feven-pence ail
ounce, which is but five-pence above the mint price. But in 1693^,
the common price of filver bullion was fix (hillings and five-pence
an ounce, which is fifteen-pence above the mint price. Even be-
fore the late re- coinage of the gold, therefore, the coin, gold and

filver

THE WEALTH OF NATIONS.

^45

filver together, when compafed with filver bulhon, was not fup- e HA P,
pofed to be more than eight per cent, below its ftandard value. u-.-v-^
In 1695, on the contrary, it had been fuppofed to be near
five and twenty per cent, below that value. But in the be-
ginning of the pfefent centuiry, that is immediately after the
great re- coinage in Ring William's time, the greater part of the
current filver coin muft have been ftilt nearer to its ftandard
weight than it is at prefent. In tht courfe of the prefent
century too there has been no great publick calamity, .fuch as
the civil war, which could either difcburage tillage or interrupt
the interior commerce of the country. And though the bounty,
which has taken place through the greater part of this century,
muft always raife the price of corn fomewhat higher than it
otherwife would be in the a6lual ftate of tillage ; yet, as in
the courfe of this century the bounty has' had full time to
produce all the good effe6ts commotily imputed to it, to en-
courage tillage, and thereby to increafe the quantity of corn in
the home marked, it lilay be fuppofed to have done fomething to
lower the price of that commodity the one way, as well as to
raife if the other. It is by many people fuppofed to- have done
more J a notion which I ftiall examine hereafter. In the fijrty---
four firft years of th^ prefent century accordingly, the average
price of the quarter of nine bufhels of the beft wheat at Windfor
market, appears, by the accounts of Eton College, to have been
2I. OS. 6d. 4-1, which is about ten fhillings and fixpence, or
more than five and tvwnty per cent, cheaper than it had been
during the fixty-four laft years of the laft century ; and about
nine fhillings and fix-pence cheaper than it had been during the fix-
teen years preceeding 1636, when the difcovery of the abundant mines
of America may be fuppofed to have produced its full efFeft; and
about one fliiliing cheaper than it had been in the twenty-fix
years preceeding 1620, before that difcovery can well be fuppofed
to have produced its fiiU effecl. According to this account, the

average

THE NATURE AND CAUSES OF

average price of middle wheat, during thefc fixty-four firft

fhillings the quarter of eight buftiels.

The value of filver, therefore, feems to have rifen fomewhat
in proportion to that of corn during the courfe of the prefent
century, and it had probably begun to do fo even fome time
before the end of the laft.

In 1687, the price of the quarter of nine bulhels of the beft
wheat at Windfor market was il. 5s. 2d. the loweft price at
which it had ever been from 1595.

In 1688, Mr. Gregory King, a man famous for his know-
ledge in matters of this kind, eftimated the average price of ,
wheat in years of moderate plenty to be to the grower 3 s. 6d.
the bufhel, or eight and twenty {hillings the quarter. The grow-
er's price I underftand to be the fame with what is fometimes called
the contrad price, or the price at which a farmer contracts for
a certain number of years to deliver a certain quantity of corn to
a dealer. As a contrail of this kind faves the farmer the ex-
pence and trouble of marketing, the contract price is generally
lower than what is fuppofed to be the average market price.
Mr. ^ King had judged eight and twenty (hillings the quarter to
be at that time the ordinary contradl price in years of moderate
plenty. Before the fcarcity occafioned by the late extraordinary
courfe of bad feafons, it was the ordinary contrail price in all
common vears.

In 1688 was granted the parliamentary bounty upon the ex- ^ '
portation of ccrn. The country gentlemen, who then compofed a
ftill greater proportion of the legiflature than they do at prefent.

had

THE W3EALTH OF NATIONS.

247

had felt that the money price of com was falling. The bounty C H A P.
was an expedient to raife it artincially to the high piice at which v. —
k had frequently been fold in the times of Charles I. and II. It
was to take place, therefore, till wheat was fo high as forty-eight
(hillings the quarter ; that is twenty (hillings, or 4^ths dearer
than Mr. King had in that very year eftimated the grower's price
to be in times of moderate plenty. If his calculations deferve any
part of the reputation which they have obtained very univerfally,
eight and forty (hillings the quarter was a price which, without
fome fuch expedient as the bounty, could not at that time be
expe6led, except in years of extraordinary fcarcity. But the:*
government of king William was not then fully fettled. It was
in no condition to refufe any thing to the country gentlemen,;
from whom it was at that very time foliciting the firft eftablifh--
ment of the annual land-tax^

The value of filver, therefore, in proportion to that of corn,

had probably rifen fomewhat before the end of the laft century;?

and it leems to have continued to do fo during the courfe of the

greater part of the prefent j though the neceffary operation of

the bounty muft have hindered that rife from being fo fenfible

as it otherwife would have been in the aflual flate of tillage,

41/i 8( jjjfiw .ntiiij

In plentiful yeai"s the bounty, 'fey occafioning an extraordinary";
exportation, neceffarily raifes the price of corn above what iV
otherwife would be in thofe years. To encourage tillage, by keep-
ing up the price of corn even in the moft plentiful years, was the.:
avowed end of the inftitution^

years of great Icarcity, indeed, the bounty lijis generally
been fufpended. It muft, however, have had fome effet\ even^
upon the prices of many of thofe years. By the extraordinary.

exportatiofti

THE NATURE AND CAUSES OF

K exportation which it occafions in years of plenty, it muft fre-
quently hinder the plenty of one year from compenfating the
fcarcity of another.

Both in years of plenty and in years of fcarcity, therefore, the
bounty raifes the price of corn above what it naturally would be
in the adual ftate of tillage. If during the fixty-four firft years
of the prefent century, therefore, the average price has been
lower than during the fixty-four laft years of the laft century, it
muft, in the fame ftate of tillage, have been much more fo, had-
it not been for this operation of the bounty.

But without the bounty, it may be faid, the ftate of tillage
would not have been the fame. What may have been the effefts
of this inftitution upon the agriculture of the country, I fliall
endeavour to explain hereafter, when I come to treat particularly
of bounties. I ftiall only obferve at prefent, that this rife in the
value of filver, in proportion to that of corn, has not been
peculiar to England. It has been obfeiVed to have taken place
in France during the fame period, and nearly in the fame pro-
portion too, by three very faithful, diligent, and laborious col-
ledlors of the prices of corn, Mr. Dupre de St. Maur, Mr.
Meffance, and the author of the Eflay on the police of grain.
But in France, till 1764, the exportation of grain was by law
prohibited j and it is fomewhat difficult to fuppofe that nearly the
fame diminution of price which took place in one country, not^
withftanding this prohibition, ftiould in another be owing to tlie
extraordinary encouragement given to exportation.

It would be more proper perhaps to confider this variation
in the average money price of corn as the effe61: rather of fome
gradual rife in the real value of filver in the European market,
jr than

THE WEALTH OF NATIONS,

than of any fall in the real average vatue of com. Corn, it has C HA P.
already been obferved, is at diftant periods of time a more accurate w^y-^y
meafure of value than either filver or perhaps any other commo-
dity. When after the difcovery of the abundant mines of America,
corn rofe to three and four times its former money price, this
change was univerfally afcribed, not to any rife in the real value
of corn, but to a fall in the real value of filver. If during the
li)fty-four firft years of the prefent century, therefore, the average
money price of corn has fallen fomewhat below v/hat it had been
during the greater part of the laft century, we fhould in the fame
manner impute this change, not to any fall in the real value of corn,
but to fome rife in the real value of filver in the European market.

The high price of corn during thefe ten or twelve years pad,
indeed, has occafioned a fufpicion that the real value of filver ftill
continues to fall in the European market. This high price of
corn, however, feems evidently to have been the efFe6l of the extra-
ordinary unfavourablenefs of the feafons, and ought therefore to be
regarded, not as a permanent, but as a tranfitory and occafional
event. The feafons for thefe ten or twelve years paft have been
unfavourable through the greater part of Europe j and the dif-
orders of Poland have very much increafed the fcarcity in all thole
countries, which in dear years ufed to be fupplied from that
market. So long a courfe of bad feafons, though not a very
common event, is by no means a fingular one j and whoever has
enquired much into the hiftory of the prices of corn in former
times, will be at no lofs to recoUefl feveral other examples of the
fame kind. Ten years of extraordinary fcarcity, befides, are not
more wonderful than ten years of extraordinary plenty. The low
price bf corn from 1741 to 1750, both inclufive, may very well
be fet in oppofition to its high price during thefe laft eight or tert
years. From 1741 to 1750, the average price of the quarter of

Vol. I. K k nine

THE NATURE AND CAUSES OF

B O^O K nine bufhels of the beft wheat at Windfor market, it appears from
y^"*»j the accounts of Eton Coliege, was only 1 1. 13 s. 9 4 d. which is
nearly 6 s. 3d. below the average price of the fixty-four firft years
of the prefent century. The average price of the quarter of eight
bufhels of middle wheat, comes out, according to this account,
to have been, during thefe ten years, only il. 6 s. 8d.

Between 1741 and 1750, however, the bounty muft have
hindered the price of corn from falling fo low in the home market
as it naturally would have done. During thefe ten years the
quantity of all forts of grain exported, it appears from the cuf-
tom-houfe books, amounted to no lefs than eight milUons twenty-
nine thoufand one hundred and fifty-fix quarters one bufliel.
The bounty paid for this amounted to 1,514,9621. 17s. 4-id.
In 1749 accordingly, Mr. Pelham, at that time prime minifter,
obferved to the Houfe of Commons, that for the three years pre-
ceeding a very extraordinary fum had been paid as bounty for the
exportation of corn. He had good reafon to make this obfer-
vation, and in the following year, he might have had ftill better.
In that fmgle year the bounty paid amounted to no lefs than
324,1761. los. 6d. It is unneceiTary to obferve how much this
forced exportation muft have raifed the price of corn above what
it otherwife would have been in the home market.

At the end of the accounts annexed to this chapter the reader
will find the particular account of thofe ten years feparated from
the reft. He will find there too the particular account of the
preceeding ten years, of which the average is likewife below, tho'
not fo much below, the general average of the fixty-four firft
years of the century. The year 1740, however, was a year of
extraordinary fcarcity. Thefe twenty years preceeding 1750, may
very well be fet in oppofitian to the twenty preceeding 1770. As

the

THE WEALTH OF NATIONS.

the former were a good deal below the general average of the C HA P,

century, notwithftanding the intervention of one or two dear years ; u« "V-— ^

fo the latter have been a good deal above it, notwithftanding the

intervention of one or two cheap ones, of 1759, for example.

If the former have not been as much below the general average,

as the latter have been above it, we ought probably to impute

it to the bounty. The change has evidently been too fudden to

be afcribed to any change in the value of filver, which is always

flow and gradual. The fuddennefs-of the efFe6l can be accounted

for only by a caufe which can operate fuddenly, the accidental

variation of the feafbns.

The money price of labour in Great Britain has, indeed, rifen
during the courfe of the prefent century. This, however, feems to
be the efFe6l, not fo much of any diminution in the value of filver
in the* European market, as of an increafe in the demand for
labour in Great Britain, arifmg from the great, and almoft univerfal
profperity of the country. In France, a country not altogether
fo profperous, the money price of labour has, lince the middle
of the laft' century, been obferved to fmk gradually with the
average money price of corn. Both in the laft century and in
the prefent, the day-wages of common labour are there faid to
have been pretty uniformly about the twentieth part of tlie ave-
rage price of the feptien of wheat, a meafure which contains a
little more than four Winchefter bufliels. In Great Britain the
real recompence of labour, it has already been ftiown, the real
quantity of the neceflaries and conveniencies of hfe which are
given to the labourer, has increafed confiderably during the courfe
of the prefent century. The rife in its money price feems to
have been the effedl, not of any diminution of the value of
filver in the general market of Europe, but of a rife in the real

K. k 2 price

252

THE NATURE AND CAUSES OF

B^p^O k; pjipe of labopr m the particular market of Great Biitain, owing
\^^^-rrr'. ^o the peculiarly happy circumftances of the country.

For fome time after the firft difcovery of America, filver would
continue to fell at its former, or not much below its former price*
The profits of mining would for fome time be very great, and much
above their natural rate. Thofe who imported that metal into
Europe, however, would foon find that the whole annual importation
could not be difpofed of at this high price. Silver would grar-
dually exchange for a fmaller and- a fmaller quantity of goods.
Its price would fmk gradually lower and lower till, it fell to its
natural price; or to what was juft fufncient to pay, according
to their natural rates, the wages of the labour, the profits of the
ftock, and the rent of the land, which muft be paid in order,
to bring it from the mine to the market. In the greater part
of the filver mines of Peru, the tax of the king of Spain, amount- •
ing to a fifth of the grofs produce, eats up, it has already been,
obfcrved, the whole rent of the land. This tax was originally a
half; it foon afterwards fell to a third, and then to a fifth, at
which rate it ftill continues. In the greater part of the filver
mines of Peru this, it feems, is all that remains after replacing
the flock of the undertaker of the work, together with its ordinary
profits ; and it feems to be univerfally acknov/Iedged that thefe
profits, which were once very high, are now as low as they can
well be, confiftently with carrying on the works.

The tax of the king of Spain was reduced to a fifth part of
the regiftered filver in 1504, one and thirty years before 1535,
the date of the difcovery of the mines of Potofi. In the courfe
of a century, or before 1636, thefe mines, the moft fertile in all'
America, had time fufficient to produce their full effedt, or to
reduce the value of filver in the European market as low. as it

could

THE WEALTH OF NATIONS

could well fall, while it continued to pay this tax to the king ^^i^^'
of Spain> A hundred years is time fufficient to reduce any com- v,^-»*^
modity, of which, there is no monopoly, to its natural price, or
to the loweft price at which, while it pays a particular tax, it can
continue, tp t»e fold for any confiderable time together.

The price of filver in the European market might perhaps have
fallen, ftill lower, and. it might haye become neceffary either to
lower the. tax upon it, in the fame manner as that upon gold,
pr to giv;e, up working the greater part of the American mines
which are now wrought. The gradual increafe of. the demand
for filver, or the gradual enlargement of the market for the pro-
duce of the filver mines of America, is probably the caufe which
hsis prevented this from happening, and which has not only
kept up the value of filver in the European market, but has per-
haps even raifed it fomewhat higher than it was about the middle-
of the lall century.

Since the firft difcovery of America, the rnarket for the pro->
duce of its filver mines has been growing gradually more and
more extenfive.

First, The market of Europe has become gradually more an J
more extenfive. Since the difcovery of America, the greater part
of Europe has been much improved. England, Holland, France^
and Germany j even Sweden, Denmark, and Ruffia, have all ad*
vanced confiderably both in agriculture and in manufadlures, Italy^
feems not to have gone backwards* The fall of Italy preceededi
the conqueft of Peru. Since that time it feems rather to have-
recovered a littlei Spain and Portugal, indeed,, are fuppofed to
have gone backwards. Portugal, however, is but a very fmalt
part of Europe, aiad the decjejifipn of Spain is not, peihaps, fo

great

^54

THE NATURE- AND CAUSES OF

B O^O K great as is commonly imagined. In the beginning of the fifteenth
Li — y~ > century, Spain was a very poor country, even in compai'ifon with
Fiance, which has been fo much improved fmce that time. It
was the well known remark of the Emperor Charles V, who had
travelled fo frequently through both countries, that every thing
abounded in France, but that every thing was wanting in Spain,
The increafing produce of the agriculture and manufaflures of
Europe muft neceffarily have required a gradual increafe in the
quantity of filver coin to circulate it ; and the increafing number
of wealthy individuals muft have required the like increafe in the
quantity of their plate and other ornaments of filver.

Secondly, America is itfelf a new market for the produce of
its own filver mines ; and as its advances in agriculture, induftry,
and population, are much more rapid than thofe of the moft
thriving countries in Europe, its demand muft increafe much
more rapidly. The Englifh colonies are altogether a new market,
which, partly for coin and partly for plate, requires a . continually
augmenting fupply of filver through a great continent where there
never was any demand before. The greater part too of the Spanifli
and Portuguefe colonies are altogether new markets. New Gra-
nada, the Yucatan, Paraguay, and the Brazils were, before difco-
- vercd by the Europeans, inhabited by favage nations, who had
neither arts nor agriculture. A confiderable degree of both has
now been introduced into all of them. Even Mexico and Peru,
though they cannot be confidered as altogether new markets, are
certainly much more extenfive ones than they ever were before.
After all the wonderful tales which have been pubUfhed concern-
ing the fpbndid ftate of thofe countries in antient times, whoever
reads, with any degree of fober judgement, the hiftory of their firft
difcovery and coiiqueft, will evidently difcern that, in arts, agri-
culture and commerce, their inhabitants were much more ig iorant

than

THE WEALTH OF NATIONS.

than the Tartars of the Ukraine are at prefent. Even the Peru- C H^A P.
vians, the more civilized nation of the two, though they made ufe
of gold and filver as ornaments, had no coined money of any kind.
Their whole commerce was carried on by barter, and there was
accordingly fcarce any divifion of labour among them. Thofe
who cultivated the ground were obliged to build their own houfes,
to make their own houlliold furniture, their own cloaths, fhoes,
and inftruaients of agriculture. The few artificers among them
are faid to have been a^l maintained by the fovereign, the nobles,
and the priefls, and were probably theii fervants or flaves. All the
ancient arts of Mexico and Peru have never f urn ifhed one fmgle
manufa6ture, to Furope. The Spaiuili armies, though they Icarce
ever exceeded five hundred men, and frequently did not amountto
half that number, found almoft every where great difficulty in
procuring fubfiftence. The famines which they are faid to have
occafioned almofl wherever they went, in countries too which at the
^ame time ai'e reprefented as very populous and well cultivated,
fufficiently demonftrate that the ftory oi this populoufnefs and high
cultivation is in a great meafure fabulous. The Spanifh colonies
are under a government in many refpects lefs favourable to agricul-
ture, improvement, and population, than that of the Englifh
colonies. They feem, however, to be advancing in all thefe much
more ra^ndly than any country in Eui ope. Iti a fertile foil and
happy climate, the great abundance and cheapnefs of land, a cir-
qumilance common to a]l new colonies, is, it feems, fo great aa
advantage as to compenfate many defeds m civil government,
Frezier, who vifited Peru in 17 13, reprefents Lima as containing^
between twenty-five and tv/enty-eight thoufand inhabitants. Ulloa,
who refided in the fame country between 1740 and 1746, repre-.
fents it as containing more than fifty thoufand. The difference iw
their accounts of the populoufnefs of feveral other principal towna
in Chili and Peru is nearly the fame; and as there feems to be nc^

^ reafoa

S.^S THE NATURE AND CAUSES OF

BOOK reafon to doabt of the good infofmation of either, it marks an
u— >«-^ increafe which is Icarce inferior to that of the EngHfli colonies,
America, therefore, is a new market for the produce of its own
filver mines, of which the demand muft increafe much more rapidly
than that of the moft thriving country in Eur(^e.

Thirdly, The Eaft-Indies is another market for the produce
of the filver mines of America, and a market which, from the
time of the firft difcovery of thofe mines, has been continually
taking off a greater and a greater quantity of filver. Since that
time, the direct trade between America and the Ea'fl-Indies, which
is carried on hy means of the Acapulco fnips, has been continually
augmenting, and the indire6l intercourfe by the way of Europe
has been augmenting in a ftill greater proportion. During the
fixteenth century, the Portuguefe were the only European nation
who carried on any regular trade to the Eaft-Indies. In the laft
years of that century the Dutch began to encroach upon this
monopoly, and in a few years expelled them from their principal
fettlements in India. During the greater part of the laft century
thofe two nations divided the moft confiderable part of the Eaft-
India trade between them j the trade of the Dutch continually
augmenting in a ftill greater proportion than that of the Portuguefe
declined. The Englifti and French carried on fome trade with
India in the laft century, but it has been greatly augmented in the
courfe of the prefent. The Eaft-India trade of the Swedes and
Danes began in the courfe of the prefent century. Even the Muf-
covites now trade regularly with China by a fort of caravans which
' go o\^r land through Siberia and Tartary to Pekin. The Eaft-
India trade of all thefe nations, if we except that of the French,
which the laft war had well nigh annihilated, has been almoft con-
tinually augmenting. The increafing confumption of Eaft-India
goods in Europe is, it feems, fb great as to afford a gradual in-
7 creafe

THE WEALTH OF NATIONS.

257

creafe of employment to them all. Tea, for example, was a drug C H^A P.
very little ufed in Europe before the middle of the lafl century. At u-^-w
prefent the value of the tea annually imported by the Englilh
Eaft-India Company, for the .ufe of their own countrymen,
amounts to more than a million and a half a year ; and even this
is not enough ; a great deal more being conftantly fmuggled into
the country from the ports of Holland, from Gottenburg in
Sweden, and from the coaft of France too as long as the French
Eaft-India Company was in profperity. The confumption of the
porcelain of China, of the fpiceries of the Moluccas, of the piece
goods of Bengal, and of innumerable other articles, has increafed
very nearly m a like proportion. The tunnage accordingly of all
the European (hipping employed in the Eaft-India trade at any
one time during the laft century, was not, perhaps, much greater
than that of the Englifti Eaft-India Company before the late reduc-
tion of their fhipping.

But in the Eaft Indies, particularly in China and Indoftan,
the value of tlie precious metals, when the Europeans firft began
to trade to thofe countries, was much higher than in Europe ; and
it ftill continues to be fo. In rice countries, which generally yield
two, fometimes three crops in the year, each of them more plen-
tiful than any common crop of corn, the abundance of food muft
be much greater than in any corn country of equal extent. Such
countries are accordingly much more populous. In them too the
rich, having a greater fuper-abundance of food to difpofe of beyond
what they themfelves can confume, have the means of purchafing a
much greater quantity of the labour of other people. The retinue
of a grandee in China or Indoftan accordingly is, by all accounts,
much more numerous and fplendid than that of the richeft fubjec^:s
in Europe. The fame fuper-abundance of food, of which they
have the difpofal, enables them to give a greater quantity of it
for all thofe fingular and rare productions which nature furnifhes

Vol. I. LI but

^58 THE NATURE AND CAUSES OF

B 0^0 K but ill very rmall quantities ; fuch as the prcGious metals and the
c— V— J precious ftones, the great obje6ts of the competition of the rich.

Though the mines, therefore, which fuppUed the Indian market
had been as abundant as thofe which fupplied the European, fuch
commodities would naturally exchange for a greater quantity of
food in India than in Europe. But the mines which fupplied the
Indian market with the precious metals feem to have been a good
deal lefs abundant, and thofe which fupplied it with the precious
ftones a good deal more fo, than the mines which fupphed the
European. The precious metals therefore would naturally exchange
for fomewhat a greater quantity of the precious ftones, and for a
much greater quantity of food in India than in Europe. The
money price of diamonds, the greateft of all fuperfluities, would be
fomewhat lower, and that of food, the firft of all neceffaries, a
great deal lower in the one country than in the other. But the
real price of labour, the real quantity of the neceffaries of life which
is given to the labourer, it has already been obferved, is lower both
in China and Indoftan, the two great markets of India, than it is
through the greater part of Europe. The wages of the labourer
will there purchafe a fmaller quantity of food ; and as the money
price of food is much lower in India than in Europe, the money
price of labour is there lower upon a double account ; upon
account both of the fmall quantity of food which it will purchale,
and of the low price of that food. But in countries of equal art
and induftry, the money price of the greater part of manufactures
will be in proportion to the money price of labour j and in manu-
facturing art and induftry, China and Indoftan, the' inferior, feem
not to be much inferior to any part of Europe. The money price
of the greater part of manufactures, therefore, will naturally be
much lower in thofe great empires than it is any where in Europe.
Through the greater part of Europe too the expence of land-car-
riage increafes very much both the real and nominal price of moft

manu-

THE WEALTH OF NATIONS, 25c

raanufaclures. It cofts more labour, and therefore more money, to C H A P.,
bring firft the materials, and afterwards the compleat manufacture v— -y-— J»
to market. In China and Indoftan the extent and variety of inland
navigations fave the greater part of this labour, and confequently of
this money, and thereby reduce ftill lower both the real and the
nominal price of the greater part of their manufa6lures. Upon
all thefe accounts, the precious metals are a commodity which it
always has been, and ftill continues to be, extremely advantageous
to carry from Europe to India. There is fcarce any commodity
which brings a better price there ; or which, in proportion to the
quantity of labour and commodities which it cofts in Europe, will
purchafe or command a greater quantity of labour and commodities
in India. It is more advantageous too to carry filver thither than
gold ; becaufe in China, and the greater part of the other markets
of India, the proportion between fine filver and fine gold is but as
ten to one whereas in Europe 'it is as fourteen or fifteen to one.
In China, and the greater part of the other markets of India, ten
ounces of filver will purchafe an ounce of gold : in Europe it ,
requires from fourteen to fifteen ounces. In the cargoes, there-
fore, of the greater part of European fliips which fail to India,
filver has generally been one of the moft valuable articles. It is
the moft valuable article in the Acapulco ftiips which fail to
Manilla. The filver of the new continent feems in tliis manner to
be the principal commodity by which the commerce between the
two extremities of the old one is carried on, and it is by means of
it chiefty that thofe diftant parts of the world are conne6led with
one another.

Lm order to fupply fo very widely extended a market, the quan-
tity of filver annually brought from the mines muft not only be
fufficient to fupport that continual increafe both of coin and of
plate which is required in all thriving countries ; but to repair that

L 1 2 continual

26o THE NATURE AND CAUSES OF

B O^O K continual wafte and confumptlon of filver which takes place in all?
c^^y'-i-^ countries where that metal is ufed.

The continual confumption of the precious metals in coin by-
wearing, and in plate both by wearing and cleaning, is very fen-
fible J and in commodities of which the ufe is fo very widely
extended, would alone require a very great annual fupply. The
confumption of thofe metals in fome particular manufa61:ures,
though it may not perhaps be greater upon the whole than this
gradual confumption, is, however, much more fenfible, as it is
much more rapid. In the manufa6lures of Birmingham alone,
the quantity of gold and filver annually employed in gilding and^
plating, and thereby difqualified from ever afterwards appearing in
the fhape of thofe metals, is faid to amount to more than fifty,
thoufand pounds Jflerling. We may from thence form fome notion
how great muft be the annual confumption in all the different'
parts of the world, either in manufactures of the fame kind withh
thofe of Birmingham, or in laces, embroideries, gold and' filver
fhifFs, the gilding of books, furniture, &c; A confiderable quan-
tity too muft be annually lofl in tranfporting thofe metals from
one place to another both by fea and by land. In the greater part
of the governments of Afia, befides, the almoft univerfal cuflom
of concealing treafures in the bowels of the earth, of which th^
knowledge frequently dies with the perfon who makes the conceal-
ment, muft occafion the lofs of a ftill greater quantity .

The quantity of gold and filver imported at both Cadiz and
Lifbon (including not only what comes under regifter, but what
may be fuppofed to be fmuggled) amounts, according to the bef%
accounts, to about fix millions flerling a year.

According

THE WEALTH OF NATIONS.

\h According to Mr. Meggens the annual importation of the
precious metals into Spain, at an average of fix years; viz. from u--v^
1748 to 1753, both inclufive J and into Portugal, at an average of
feven years ; viz. from 1747 to 1753, both inclufive; amounted
in filver to 1,101,107 pounds weight; and in gold to 49 940
pounds weight. The filver, at fixty-two fhillings the pound Troy,
amounts to 3,413,4311. los. fteiiing. The gold, at forty- four
guineas and a half the pound Troy, amounts to 2,333,446!. i4S^
fterling. Both together amount to 5,746,878!. 4s. fterling. The
account of what was imported under regifler, he afTures us is exa6l.
He gives us the detail of the particular places from which the gold
and filver were brought, and of the particular quantity of each
metal, which, according to the regifter, each of them afforded.
He makes an allowance too for the quantity of each metal which
he fuppofes may have been fmuggled. The great experience of this
judicious merchant renders his opinion of confiderable weight.

According to the eloquent and fometimes well informed
author of the philofophical and political hiftory of the eftablifli-
ment of the Europeans in the two Indies, the annual importation
of regiftered gold and filver into Spain, at an average of eleven
years; viz. from 1754 to 1764, both inclufive; amounted to
13,984,185 piaftres of ten reals. On account of what may have
been fmuggled, however, the whole- annual importation, he fup-
pofes, may have amounted to feventeen millions of piaftres ; which
at 4s. 6d. the piaftre, is equal to 3,825,000!. fterling. He gives
the detail too of the particular places from which the gold and
filver were brouglit, and of the particular quantities of . each metal
which, according to the regifter, each of them aftoided. He in-
forms us too, that if we were to judge of the quantity of gold
annually imported from the Brazils into Liihon by the amount of
tlie tax paid to the l^ing of Portugal, which it feems is one-fifth

262

THE NATURE AND CAUSES OF

BOOK of the ftandard metal, we might value it at eighteen millions of
w-v——^ cruzadoes, or forty-five millions of French livres, equal to about
two millions fterling. On account of what may have been
fmuggled, however, we may fafely, he fays, add to this fum an
eighth more, or 250,000!. fterling, fo that the whole will amount
to 2,250,0001. fterling. According to this account, therefore,
the whole annual importation of the precious metals into both
Spain and Portugal, amounts to about 6,075,0001. fterling.

Several other very well authenticated accounts, I have been
afiured, agree in making this whole annual importation amount at
an average to about fix millions fterling ; fometimes a little more,
fometimes a little lefs.

The annual importation of the precious metals into Cadiz and
Lift)on, indeed, is not equal to the whole annual produce of the
mines of America. Some part is fent annually by the Acapulco
fhips to Manilla ; fome part is employed in the contraband trade
which the Spanifli colonies carry on with thofe of other European
nations j and fome part, no doubt, remains in the country. The
mines of America, befides, are by no means the only gold and
filver mines in the world. They are, however, by far the moft
abundant. The produce of all the other mines which are known,
is infignificant, it is acknowledged, in comparifon with theirs;
and the far greater part of their produce, it is likewife acknow^
ledged, is annually imported into Cadiz and Lift)on. But the
confumption of Birmingham alone, at the rate of fifty thoufand
pounds a year, is equal to the hundred and twentieth part of this
annual importation at the rate of fix millions a year. The whole
annual confumption of gold and filver therefore in all the different
countries of the world where thofe metals are ufed, may perhaps be
nearly equal to the whole annual produce. The remainder may

THE WEALTH OF NATIONS.

263

b€ no niQi-e than fufficient to fupply the increafing demand of all
thriving countries. It may even have fallen fo far fliort of this
demand as fomevvhat to raife the price of thofe metals in the
European market.

The quantity of brafs and iron annually brought from 'the
mine to the market is out of all proportion greater than that of
gold and fdver. We do not, however, upon this account, imagine
that thofe coarfe metals are likely to multiply beyond the demand^
or to become gradually cheaper and cheaper. Why fliould we
imagine that the precious metals are likely to do fo ? The coarfe
metals indeed, though harder, are put to much harder ufes, and.
as they are of lefs value, lefs care is employed in their prefervation.
The precious metals, however, are not necelTarily immortal any-
more than they, but are liable too to be loft, wafted and confumed-:
in a great variety of ways.

The price of all metals, though liable to flow and gradual'
variations, varies lefs from year to year than that of almoft any
other part of the rude produce of land j and the price of the
precious metals is even lefs liable to fudden variations than that of
the coarfe ones. The durablenefs of metals is the foundation of
this extraordinary fteadinefs of price. The corn which was brought
to market laft year, will be all or almoft all confumed long before -
the end of this year. But fome part of the iron which was brought
fi'om the mine two or three hundred years ago, may be ftill in
ufe, and perhaps fome part of the gold which was brought from •
it two or three thoufand years ago. The different mafles of corn ;
which in different years muft fupply the confumption of the world,
will always be nearly in proportion to the refpe6live produce of
thofe different years. But the proportion between the different
mafies of iron which may be in ufe in two different years, will be •

4 y^^i.

THE NATURE AND CAUSES OF

very little affe6ted by any accidental difference in the produce of
the iron mines of thofe two years j and the proportion between the
mafies of gold will be ftill lefs affe6led by any fuch difference in the
produce of the gold mines. Though the produce of the greater
part of metallick mines, therefore, varies, perhaps, ftill more from
yeairto year than that of the greater part of corn fields, thofe vari-
ations have not the fame effe6l upon the price of the one fpecies
of commodities, as upon that of the other.

Variations in the "Proportion between the refpeBive Values of

Gold and Silver.

gEFORE the difcovery of the mines of America, the value of
fine gold to fine filver was regulated in the different mints of
Europe, between the proportions of one to ten and one to twelve ;
that is, an ounce of fine gold was fuppofed to be worth from ten to
twelve ounces of fine filver. About the middle of the laft century
it came to be regulated, between the proportions of one to fourteen
and one to fifteen ; that is, an ounce of fine gold came to be fup-
pofed worth between fourteen and fifteen ounces of fine filver.
Gold rofe in its nominal value, or in the quantity of filver which
was given for it. Both metals funk in their real value, or in the
quantity of labour which they could purchafe ; but filver funk more
than gold. Though both the gold and filver mines of America
exceeded in fertility all thofe which had ever been known before,
the fertility of the filver mine* had, it feems, been proportionably
ftill greater than that of the gold ones.

The great quantities of filver carried annually from Europe to
India, have, in fome of the EngUfii fettlements, gradually reduced
the value of that metal in proportion to gold. In tlic mint of
7 Calcutta,

THE WEALTH OF NATIONS.

265

Calcutta, an ounce of fine gold is fuppofed to be worth fifteen C HA P.
ounces of fine filver, in the fame manner as m Europe. It is m the u —
mint perhaps rated too high for the value which it bears in the
market of Bengal. In China, the proportion of gold to filver
ftill continues as one to ten. In Japan it is faid to be as one to
eight.

The proportion between the quantities of gold and filver
annually imported into Europe, according to Mr. Meggens's account,
is as one to twenty-two nearly that is, for one ounce of gold there
are imported a little more than twenty-two ounces of filver. The
great quantity of filver fent annually to the EafI: Indies, reduces, he
fuppofes, the quantities of thofe metals which remain in Europe
to the proportion of one to fourteen or fifteen, the proportion of
their values. The proportion between their values, he feems to
think, muft necefiarily be the fame as that between their quantities,
and would therefore be as one to twenty-two, were it not for this
greater exportation of filver.

But the ordinary proportion between the refpeftive values of two
commodities is not necefiarily the fame as that between the quan-
tities of them which are commonly in the market. The price of an
ox, reckoned at ten guineas, is about threefcore times the price of a
lamb, reckoned at 3 s. 6 d„ It would be abfurd, however, to infer
from thence, that there are commonly in the market threefcore
lambs for one ox : and it would be juft as abfurd to infer, becaufe
an ounce of gold will commonly purchafe from fourteen to
fifteen ounces of filver, that there are commonly in the market
only fourteen or fifteen ounces of filver for one ounce of gold.

The quantity of filver commonly in the market) it is probable,
is much greater in proportion to that of gold, than the value of a
Vol. I. INI ni certain

266

THE NATURE AND CAUSES OF

BOOK certain quantity of gold is to that of an equal quantity of {ilver,
c,„.-y^-«j The whole quantity of a cheap commodity brought to market,
is commonly, not only greater, but of greater value, than thfe
whole quantity of a dear one. The whole quantity of bread
annually brought to market, is not only greater, but of greater
value than the whole quantity of butcher's-meat ; the whole
quantity of butcher's-meat, than the whole quantity of poultry j
and the whole quantity of poultry, than the whole quantity
of wild fowl. There are fo many more purchafers for the cheap
than for the dear commodity, that, not only a greater quantity of
it, but a greater value can commonly be difpofed of. The whole
quantity, therefore, of the cheap commodity mull commonly be
greater in proportion to the whole quantity of the dear one, than the
value of a certain quantity of the dear one, is to the value of an equal
quantity of the cheap one. When we compare the precious metals with
one another, filver is a cheap, and gold a dear commodity. We
ought naturally to expe6t, therefore, that there fhould always be
in the market, not only a greater quantity, but a greater value of
filverthan of gold. Let any man, who has a little of both, com-
pare his own filver with his gold plate, and he will probably find,
that, not only the quantity, but the value of the former greatly
exceeds that of the latter. Many people, befides, have a good
deal of filver who have no gold plate, which, even with thofe who
have it, is generally confined to watch cafes, fnuff-boxes, and fuch
like trinkets, of which the whole amount is feldom of great value. In
the Britifh coin, indeed, the value of the gold preponderates greatly,
but it is not fo in that of all countries. In the coin of fome coun-
tries the value of the two metals is nearly equal. In the Scotch
coin, before the Union with England, the gold preponderated very
little, tliough it did fomewhat, as it appears by the accounts of
the mint. In the coin of many countries the filver preponderates.
In France, the largeft funis are commonly paid in that metal,

and

THE WEALTH OF NATIONS.

and it is there difficult to get more gold than what it is neceflary to C
carry about in your pocket. The fuperior value, however, of the
filver plate above that of the gold, which takes place in all
countries, will much more than compenfate the preponderancy of
the gold coin above the filver, which takes place only in fome
countries.

Though, in one fenfe of the word, filver always has been,
and probably always will be, much cheaper than gold; yet in
another fenfe, gold may, perhaps, in the prefent ftate of the
European market, be faid to be fomewhat cheaper than filver. A
commodity may be faid to be dear or cheap, not only according to
the abfolute greatnefs or fmallnefs of its ufual price, but according
as that price is more or lefs above the lowefl for which it is poflible
to bring it to market for any confiderable time together. This
loweft price is that which barely replaces, with a moderate profit,
the ftock which muft be employed in bringing the commodity
thither. It is the price which affords nothing to the landlord,
of which rent makes not any component part, but which refolves
itfelf altogether into wages and profit. But, in the prefent ftate
of the European market, gold is certainly fomewhat nearer to this
loweft price than filver. The tax of the king of Spain upon gold
is only one-twentieth part of the ftandard metal, or five per cent.
whereas his tax upon filver amounts to one- fifth part of it, or to
twenty per cent. In thefe taxes too, it has already been obferved,
confifts the whole rent of the greater part of the gold and filver
mines. of Spanifh America; and that upon gold is ftill worfe paid
than that upon filver. The profits of the undertakers of gold mines
too, as they more rarely make a fortune, muft, in general, be ftill more
moderate than thofe of the undertakers of filver mines. The price
of Spanifh gold, therefore, as it affords both lefs rent and lefs profit,
muft, in the European market, be fomewhat nearer to the loweft

M m 2 price

268

THE NATURE AND CAUSES OF

BOOK price for which it is poflible to bring it thither, than the price of

u. v'-^ SpaniHi filver. The tax of the king of Portugal, indeed, upon

the gold of the Brazils, is the fame with that of the king of Spain
upon the filver of Mexico and Peru ; or one- fifth part of the
ftandard metal. It muft ftill be true, however, that the whole mafs
of American gold comes to the European market, at a price nearer
to the loweft for which it is poflible to bring it thither, than the
whole mafs of American filver. When all expences are computed,
it would feem, the whole quantity of the one metal cannot
be difpofed of fo advantageoufly as the whole quantity of the
other.

The price of diamonds and other precious ftones may, perhaps,
be ftill nearer to the loweft price at which it is poffible to bring them
to market, than even the price of gold.

Were the king of Spain to give up his tax upon filver, the
price of that metal might not, upon that account, fink immediately
in the European market. As long as the quantity brought thither
continued the fame as before, it would ftill continue to fell at the
fame price. The firft and immediate effecl of this change, would be
to increafe the profits of mining, the undertaker of the mine now
gaining all that he had been ufed to pay to the king. Thefe great
profits would foon tempt a greater number of people to undertake
the working of new mines. Many mines would be wrought which
cannot be wrought at prcfent, becaufe they cannot afiord to pay
this tax, and the quantity of filver brought to market would, in
a few years, be fo much augmented, probably, as to fmk its price
about one- fifth below its prefent ftandard. This diminution in the
value of filver would again reduce the profits of mining nearly to
their prefent rate.

THE WEALTH OF NATIONS.

It is not indeed very probable, that any part of a tax which C
affords fo important a revenue, and which is impofed too upon u
one of the moft proper fubje6ls of taxation, will ever be given up
as long as it is poflible to pay it. The impoflibility of paying it,
however, may in time make it neceffary to diminifh it, in the
fame manner as it made it neceffary to diminifli the tax upon gold.
That the filver mines of Spanifh America, like all other mines,
become gradually more expenfive in the working, on account of
the greater depths at which it is neceffary to carry on the works,
and of the greater expence of drawing out the water and of fupplying
them with frefli air at thofe depths, is acknowledged by every body
who has enquired into the ftate of thofe mines..

These caufes, which are equivalent to a growing fcarcity of
filver, (for a commodity may be faid to grow fcarcer when it
becomes more difficult and expenfive to colle6l a certain quantity
of it), muft, in time, produce one or other of the three following
events. The increafe of the expence mufl cither, firff, be com-
penfated altogether by a proportionable increafe in the price of
the metal ; or, fecondly, it muft be compenfated altogether by a
proportionable diminution of the tax upon filver; or, thirdly, it
muft be compenfated partly by the one, and partly by the other of
thofe two expedients. This third event is very pofTible. As gold
rofe in its price in proportion to filver, notwithftanding a great
diminution of the tax upon gold ; fo filver might rife in its price
in proportion to labour and commodities, notwithftanding an equ;il
diminution of the tax upon filver^

That the firft of thefe three events has already begun to take
place, or that filver has, during the courfe of the prefent century,,
begun to rife fomewhat in its value in the European market, the
fails and arguments which have been alledged above difpofe me to

believe*.

THE NATURE AND CAUSES OF

K believe. The rife, indeed, has hitherto been fo very fmall, that,
after all that has been faid, it may, perhaps, appear to many people
uncertain, not only whether this event has adually taken place,
but whether the contrary may not have taken place, or whether the
value of filver may not dill continue to fall in the European
market.

Grounds of the Sufpicion that the Value of Silver fill continues ,

to decreafe.

'^jp H E increafe of the wealth of Europe, and the popular notion
that, as the quantity of the precious metals naturally increafes
with the increafe of wealth, fo their value diminiflies as their quan-
tity increafes, may, befides, difpofe many people to believe that
their value ftill continues to fall in the European market ; and the
ftill gradually increafmg price of many parts of the rude produce of
land may, perhaps, confirm them ftill further in this opinion.

That the increafe of the quantity of the precious metals in any
country, which arifes from the increafe of wealth, has no tendency
to diminifti their value, I have endeavoured to fliow already. Gold
and filver naturally refort to a rich country, for the fame reafbn that
all forts of luxuries and curiofities refort to it ; not becaufe they are
cheaper there than in poorer countries, but becaufe they are dearer,
or becaufe a better price is given for them. It is the fuperiority of
price which attracts them, and as foon as that fuperiority ceafes, they
necefiaiily ceafe to go thither.

If you except corn and fuch other vegetables as are raifed
altogether by human induftry, that all other forts of rade produce,
cattle, poultry, game of all kinds, the ufeful foifils and minerals of
4 the

THE WEALTH NATIONS.

die earth, &c. naturally grow dearer as the fociety advances in C
wealth and improvement, I have endeavoured to fhow already.
Though fuch commodities, therefore, come to exchange for a greater
quantity of filver than before, it will not from thence follow that
filver has become really cheaper, or will purchafe lefs labour than
before, but that fuch commodities have become really dearer, or
will purchafe more labour than before. It is not their nominal
price only, but their real price which rifes in the progrefs of
improvement. The rife of their nominal price is the effed, not of
any degradation of the value of filver, but of the rife in their
real price.

Def erent FffeBs of the Progrefs of Improvement upon three different

Sorts of rude Produce »

^"JpHESE different forts of rude produce may be divided into
three clafles. TJie firft comprehends thofe which it is fcarce
in the power of human induftry to multiply at all. The fecond,
thofe which it can multiply in proportion to the demand. The
third, thofe in which the efficacy of induftry is either limited or
uncertain. In the progrefs of wealth and improvement, the real
price of the firft may rife to any degree of extravagance, and feems not
to be Hmited by any certain boundary. That of the fecond, though
it may rife greatly, has, however, a certain boundary beyond which it
cannot well pafs for any confiderable time together. That of the third,
though its natural tendency is to rife in the progrefs of improve-
ment, yet in the fame degree of improvement it may fometimes
happen even to fall, fometimes to continue the fame, and fome-
times to rife more or lefs, according as different accidents render
the efforts of human induftry, in multiplying this fort of rude,
produce, more or lefs fuccefsfuL .

272

THE 'Stature and causes of

BOOK

^"^^^ Firji Sort.

The firft fort of rude produce of which the price rifes in the
progrefs of improvement, is that which it is fcaice in the power of
human induftry to multiply at all. It confifts in thofe things
which nature produces only in certain quantities, and which being
of a very perifhable nature, it is impoffible to accumulate together
the produce of many different feafons. Such are the greater part
of rare and lingular birds and fifhes, many different forts of game,
almoft all wild-fowl, all birds of paffage in particular, as well as
many other things. When wealth, and the luxury which accom-
panies it, increafe, the demand for thefe is likely to increafe with
them, and no effort of human induftry may be able to increafe the
fupply much beyond what it was before this increafe of the demand.
The quantity of fuch commodities, therefore, remaining the fame,
or nearly the fame, while the competition to purchafe them is con- -
tinually increafmg, their price may rife to any degree of extrava-
gance, and feems not to be limited by any certain boundary. If
woodcocks fhould become fo fafhionable as to fell for twenty guineas
a- piece, no effort of human induftry could increafe the number of
thofe brought to market, much beyond what it is at prefent.
The high price paid by the Romans, in the time of their greateft
grandeur, for rare birds and fiflies, may in this manner eafily be
accounted for. Thefe prices were not the effects of the low value
of filver in tiiofe times, but of the high value of fuch rarities and
curiofities as human induftry could not multiply at pleafure. The
real value of filver was higher at Rome, for fome time before and
after the fall of the republic, than it is through the greater part
of Europe at prefent. Three feftertii, equal to about fixpence
fterling, was the price which the republic paid for the modius
or peck of the tithe wheat of Sicily. This price, however,
7 was

THE WEALTH OF NATIONS.

was probably below the average maiket price, the obligation to C HAP.
deliver their wheat at this rate being confidered as a tax upon the u-.-v--*-»
Sicilian farmers. "When the Romans, therefore, had occafion to
order more corn than the tithe of wheat amounted to, they were
bound by capitulation to pay for the furplus at the rate of four
feftertii, or eight-pence ftcrling the peck ; and this had probably
been reckoned the moderate and reafonable, that is, the ordinary
or average contra6l price of thofe times ; it is equal to about one and
twenty (hillings the quarter. Eight and twenty fnillings the quarter
was, before the late years of fcarcity, the ordinary contrail price
of Englifh wheat, which in quahty is inferior to the Sicilian, and
generally fells for a lower price in the European market. The
value of filver, therefore, in thofe antient times, muft have been
to its value in the prefent, as three to four inverfely, that is, three
ounces of filver would then have purchafed the fame quantity of
labour and commodities which four ounces will do at prefent.
When we read in Pliny, therefore, that Seius bought a white
nightingale, as a prefent for the emprefs Agrippina, at the price of
fix thoufand feftertii, equal to about fifty pounds of our prefent
money ; and that Afinius Celer purchafed a furmullet at the price
of eight thoufand feftertii, equal to about fixty-fix pounds thirteen
fhillings and four-pence of our prefent money, the extravagance
of thofe prices, how much foever it may furprife us, is apt, not-
withftanding, to appear to us about one-third lefs than it really
was. Their real price, the quantity of labour and fubfiftence which
was given away for them, was about one-third more than their
nominal price is apt to exprefs to us in the prefent tintes. Seius
gave for the nightingale the command of a quantity of labour and
fubfiftence, equal to what 661. 13s. ^d. would purchafe in the
prefent times ; and Afinius Celer gave for the furmullet the com-
mand of a quantity equal to what 881, 17 s. 9 -id. would purchafe.
What occafioned the extravagance of thofe high prices was, not fo
Vol. I. N n much

274

THE NATURE AND CAUSES OF

B O^O K much the abundance of filver, as the abundance of labour and
V— -V— ^ fubfiftence, of which thofe Romans had the difpofal, beyond what
was neceffary for their own ufe. The quantity of fdver, of which
they had the difpofal, was a good deal lefs than what the command
of the fame quantity of labour and fubfiftence would have procured
to them in the prefent times »

See end Ssrt»

The fecond fort of rude produce of which the price rifes in the
progrefs of improvement, is that which human induftry can mul-
tiply in proportion to the demand. It confifts in thofe ufeful:
plants and animals,, which^. in uncultivated countries, nature pro-
duces with fuch profufe abundance, that they are of little or no
value, and which, as cultivation advances, are therefore forced to
» give place to fome more profitable produce. During a long period
in the progrefs of improvement, the quantity of thefe is continually
diminifliing, while at the fame time the demand for them is continu-
ally increafmg. Their real value, therefore, the real quantity of la-
bour which they will purchafe or command, gradually rifes, till at laft
it gets fo high as to render them as profitable a produce as any
thing elfe which human induftry can raife upon the moft fertile
and beft cultivated land. When it has 'got fo high it cannot well
go higher. If it did, more land and more induftry would foon be
employed to increafe their quantity.

When the price of cattle, for example^ rifes fo high that it is
as profitable to cultivate land in order to raife food for them, as in
order to raife food for man, it cannot well go higher. If it did, more
corn land would foon be turned into pafture. The extenfion of
tillage, by diminifhing the quantity of wild pafture, diminifties the
quantity of butcher's-meat which the country naturally produces
without labour or cultivation, and by increafmg the number of

thofe

THE WEALTH OF NATIONS.

275

thofe who have either corn, or, what comes to tihe fame C H^A P.
thing, the price of com, to give in exchange for it, increales the v.—
demand. The price of butcher's - meat, therefore, and confe-
quently of cattle, muft gradually rife till it gets fo high that it
becomes as profitable to employ the moft fertile and beft cultivated
lands in raifmg food for them as in raifing corn. But it muft
always be late in the progrefs of improvement before tillage can
be fo far extended as to raife the price of cattle to this height ; and
till it has got to tliis height, if the country is advancing at all, their
price muft be continually rifmg. There are, perhaps, fome parts of
Europe in which the price of cattle has not yet got to this height.
It had not got to this height in any part of Scotland before the
union. Had the Scotch cattle been always confined to the market
of Scotland, in a country in which the quantity of land, which
can be applied to no other purpofe but the feeding of cattle, is fb
great in proportion to what can be applied to other purpofes, it is
fcarce polfible, perhaps, that their price could ever have rifen fo
high as to render it profitable to cultivate land for the fake of feed-
ing them. In England, the price of cattle, it has already beei^i
obferved, feems, in the neighbourhood of London, to have got
to this height about the beginning of the laft century; but it was
much later probably before it got to it through tlie greater part of
the remoter counties;, in fome of which, peihaps, it may fcarce
yet have got to it. Of all the different fubftances, however, which
compofe this fecond fort of rude produce, cattle is, perhaps, that
of which the price, in the progrefs of improvement, rifes firft' to
this height.

TuLt the price of cattle, indeed, has got to this height, it fecms
fcarce pofiible that the greater part, even of tliofe lands which arc
capable of the higheft cultivation, can be completely cultivated.
Ill all. farms too diftantfrom any town to carry manure from it,

N n 2 that

THE NATURE AND CAUSES OF

K that is, in the far greater part of thofe of every extenfive country,
•J the quantity of well- cultivated land muft be in proportion to the
quantity of manure which the farm itfelf produces ; and this again
muft be in proportion to the ftock of cattle which are maintained
upon it. The land is manured either by pafturing the cattle upon
it, or by feeding them in the ftable, and from thence carrying out
their dung to it. But unlefs the price of the cattle be fufficient to
pay both the rent and profit of cultivated land, the farmer cannot
afford to pafture them upon it ; and he can ftill lefs afford to feed
them in the ftable. It is with the produce of improved and
cultivated land only, that cattle can be fed in the ftable j be-
caufe to colle6l the fcanty and fcattered produce of wafte and un-
improved lands would require too much labour and be too ex-
penfive. If the price of the cattle, therefore, is not fufficient to
pay for the produce of improved and cultivated land, when they
are allowed to pafture it, that price will be ftill lefs fufficient to
pay for that produce when it muft be colle6led with a good deal
of additional labour, and brought into the ftable to them. In thefe
circumftances, therefore, no more cattle can, with profit, be fed in
the ftable than what are neceffary for tillage. But thefe can never
afford manure enough for keeping conftantly in good condition,
all the lands which they are capable of cultivating. What they
afford being infufficient for the whole farm, will naturally be re*
ferved for the lands to which it can be moft advantageoufly or
conveniently applied; the moft fertile, or tliofe, perhaps, in the
neighbourhood of the farm-yard. Thefe, therefore, will be kept
conftantly in good condition and fit for tillage. The reft will,
the greater part of them, be allowed to lie wafte, producing
fcarce any thing but fome miferable pafture, fuft ftifficient to keep
alive a few ftraggling, half-ftarved cattle; the farm, though much
underftockcd in proportion to what would be neceffary for its com-
plete cultivation, being very frequently overftocked in proportion to
4 its-

THE WEALTH OF NATIONS. 5177

its a6i:ual produce. . A porticm of this wafte land, however, after C H^A P.
having been paftured in this wretched manner for fix or feven years u^-x--^— »
together, may be ploughed up, when it will yield, perhaps, a
poor crop or two of bad oats, or of fbme other coarfe grain; and
then, being entirely exhaufted, it muft be relied and paftured again
as before, and another portion ploughed up to be in the fame
manner exhaufted and refted again in its turn. Such accordingly
was the general fyftem of management all over the low country of
Scotland before the union. The lands which were kept con-
ftantly well manured and in good condition, feldom exceeded a
third or a fourth part of the whole farm, and fometimes did not
amount to a fifth or a fixth part of it. The reft were never ma-
nured, but a certain portion of them was in its turn, notwith-
ftanding, regularly cultivated and exhaufted. Under this fyftem
of management, it is evident, . even that part of the lands of Scot-
land which is capable of good cultivation, could produce but little
in comparifon of what it maybe capable of producing. But how
difadvantageous foever this fyftem may appear, yet befoiethe union
the low price of cattle feems to have rendered it almoft unavoid-
able. If, notwithftmding a great rife in their price, it ftill con-
tinues to prevail through a confiderable part of the country, it is
owing in many places, no doubt, to ignorance and attachment to
old cuftoms, but in moft places to the unavoidable obftru6lions
which the natural courfe of things oppofes to the immediate or
fpecdy eftabhfnment of a better fyftem : firft, to the poverty of
the tenants, to their, not having yet had time to acquire a ftock of
cattle fufficient to cultivate their lands more completely, the fame,
rife of price which would render it advantageous for them to main-
.tain a greater ftock, rendering it more difhcult for them to . ac-
quire it; and, fecondly, to their not having yet had time to put
their lands in condition to maintain this greater ftock properly,
fjippofmg they were capable of acquiring it. The increafe of

ftock

273 THE NATURE AND CAUSES OF

B OO K ftock and the improvement of land are two events which muft go
hand in hand, and of which the one can no where much out--run
the other. Without fome increafeof ftock, there can be fcarce any
improvement of land, but tlierc can be no confiderable increafe
of ftock but in confequence of a confiderable improvement of
land; becaufe otherwife the land could not maintain it. Thefc
natural obftrudions to the efliablifhment of a better fyft^ra, can-
not be removed but by a long courfe of frugality and induftry j and
half a century or a century more, perhaps, muft pafs away before
the old fyftem, which is wearing out gradually, can be completely
abolilhed through all the different parts of tlie country^ Of all
commercial advantages, however, which Scotland has derived from
the union with England, this rife in the price of cattle is, per-
haps, the greateft. It has not only raifed the value of all highland
eftates, but it has, perhaps, been the principal caufe of the im-
provement of the low country

In all new colonies the great quantity of wafte land, which
can for many years be applied to no other purpofe but the feed-
ing of cattle, foon renders them extremely abundant, and in
every thing great cheapnefs is the neceffary confequence of great
abundance. Though all the cattle of the European colonies in
America were originally carried from Europe, they foon multi-
plied fo much there, and became of fo little value, that even
horfes were allowed to run wild in the woods without any owner
thinking it worth while to claim them. It muft be a long time
after the firft eftablifhment of fuch colonies before it can become
profitable to feed cattle upon the produce of cultivated land.
The fame caufes, therefore, the want of manure, and the dif-
proportion between the ftock employed in cultivation, and the
land which it is deftined to cultivate, are likely to introduce there
a fyftem of huft)andry not unlike that which ftill continues to
7 take

THE WEALTH OF NATIONS.

279

take place in fo many parts of Scotland. Mr. Kalm, the Swedifh C I^A P.
traveller, when he gives an, account of the hufbandry of fome v—
of the Englifli colonies in North America, as he found it in 1 749^
bbferves, accordingly, that he can with difficulty difcover there
the chara6ter of the Englilh nation, fo well (killed in all the
different branches of agriculture. They make fcarce any manure
for their corn fields, he fays ; but when one piece of ground has
bfeen exhaufted by continual cropping, they clear and cultivate
another piece of frefh land ; and when that is exhaufted, proceed
to a tliird. Their cattle are allowed to wander through the woods
and otlier uncultivated grounds, where they are half ftarved; /
having long ago extirpated almoft all the annual graffes by cropping
them too early in the fpring, before they had time to form their
flowers, or to fhed their feeds. The annual grafles were, it
feems, the beft natural graffes in that part of North America 5
and when the. Europeans firft fettled there, they ufed to grow
very thick, and to rife three or four feet high. A piece of
ground which, when he wrote, could not maintain one cow,
would in former times, he was affured, have riiaintained four,,
each of which would have given four times the quantity of milk,
vi^hich that one was capable of giving. The poornefs of the
paflure had, in his opinion, occafioned the degradation of their
cattle, which degenerated fenfibly from one generation to another.
They were probably not unlike that flunted breed which was
common all over Scotland thirty or forty years ago, and which is
now fo much mended through the greater part of the lov/ country, .
not fo much by a change of the breed, though that expedient has
been employed in fome places, as by a more plentiful method of:
feeding them.

Though k is late, therefore, ilV the progrefs of improvemerrtr
befbre cattle can- bring fuck a price as to render it profitable to*

cultivator

.28.0

THE NATURE AND CAUSES OF

BOOK cultivate land for. the fake of feeding them; yet of all the dif-
(^ -^'-,_/ ferent parts which compofe this fecond fort of rude produce, they
are perhaps the firft which bring this price ; becaufe till they bring
•it, it feems ,impoflible that improvement can be brought near
-even to that degree of perfe6lion to which it has arrived in many
;parts of Europe,

As cattle are among the firft, fo perhaps venifon is among the
laft parts of this fort of rude produce which bring this price.
The price of venifon in Great Britain, how extravagant foever
it may appear, is not near fufficient to compenfate the expence
of a deer park, as is well known to all thofe who have had any
experience in the feeding of deer. If it was otherwife, the feed-
ing of deer would foon become an article of common farming ;
in the fame manner as the feeding of thofe fmall birds called
Turdi was among the antient Romans. Varro and Columella
alTure us that it was a moft profitable article. The fattening of
Ortolans, birds of paiTage which arrive lean in the country, is
faid to be fo in. fome parts of France. If venifon continues in
fafliion, and the wealth and luxury of Great Britain increafe as
they have done for fome time paft, its price may very probably
rife ftill higher than it is at prefent.

Between that period in the progrefs of improvement which
brings to its height the price of fo neceflary an article as cattle,
and that which brings to it the price of fuch a fuperfluity as
venifon, there is a very long interval, in the courfe of which many
other forts of rude produce gradually arrive at their higheft
price, fome fooner and fome later, according to different circum-
ftances.

Thus in every farm the offals of the barn and ftables will
maintain a certain number of poultry. Thefe, as they are fed

v^'ith

THE WEALTH OF NATIONS.

Tvith what would otherwife be loft, are a meer fave-allj and as CHAP,
they coft the farmer fcarce any thhig, fo he can afford to fell
them for very little, Almofl all that he gets is pure gain, and
their price can fcarce be fo low as to difcourage him from feed-
ing this number. But in countries ill cultivated, and, therefore,
but thinly inhabited, the poultry, which are thus raifed without
€xpence, are often fully fufiicient to fupply the whole demand.
In this ftate of things, therefore, they are often as cheap as
-butcher's-meat, or any other fort of animal food. But the whole
quantity" of poultry, which the farm in this rnanner produces
without expence, muft always be much fmaller. than the whole
quantity of butcher's meat which is reared upon it ; and in times
of wealth and luxury what is rare, with only nearly equal merit,
is alwniys preferred to what is common. As wealth and luxury
increafe, therefore, in confequence of improvement and culti-
vation, the price of poultry gradually rifes above that of butcher's
meat, till at laft it gets fo high that it becomes profitable to cul-
tivate land for the fake of feeding them. When it has got to
this height, it cannot well go higher. If it did, more land would
foon be turned to this purpofe. In feveral provinces of France,
the feeding of poultry is confidered as a very important article
in rural (Economy, and fufficiently profitable to encourage the
farmer to raife a confiderable quantity of Indian corn and buck
wheat for this purpofe. A rsiddling farmer will there fometimes
have four hundred fowls in his yaid. The feeding of poultry
iecms fcarce yet to be generally confidered as a matter of fo much
importance m England. Tliey are certainly, hovvevei", dearer
in England than in France, as England receives confiderable fup-
plies from France. In the progrefs of improvement, the period
at which every particular f )rt of animal food is deareO:, muft na-
turally be that which immediately prececds the general pravSlice
of cultivating land for the fake of raifing it. For fome time
YoL. I. O o before

28^

THE NATURE AND ^CAUSES OF

B O^O K before this pra6lice becomes general, the fcarcity muft neceflarily
u— V — ~) raife the price. After it has become general, new methods of
feeding are commonly fallen upon, which enable the farmer to
raife upon the fame quantity of ground a much greater quantity
of that particular fort of animal food. The plenty not only
obliges him to fell cheaper, but in confequence of thefe improve-
ments he can afford to fell cheaper ; for if he could not afford
it, the plenty would not be of long continuance. It has been
probably in this manner that the introdu6lion of clover, turnips,
carrots, cabbages, &c. has contributed to fmk the common price
of butcher's-meat in the London market fomewhat below what it
was about the beginning of the lafl century.

The hog, that finds his food among ordure, and greedily devours
many things rejedled by every other ufeful animal, is, like poultry,
originally kept as a fave-all. As long as the number of fuch ani-
mals, which can thus be reared at little or no expence, is fully
fufHcient to fupply the demand, this fort of butcher's-meat comes
to market at a much lower price than any other. .But when
the demand rifes beyond what this quantity can fupply, when
it becomes neceffary to raife food on purpofe for feeding and
fattening hogs, in the fame manner as for feeding and fatten^
ing other cattle, the price neceffarily rifes, and becomes propor-
tionably either higher or lower than that of other butcher's-meat,
according as the nature of the country, and the ftate of its.
agriculture, happen to render the feeding of hogs more or lefs
expenfive than that of other cattle. In France, according to
' Mr. Buffon, the price of pork is nearly equal to that of
beef. In mofl parts of Great Britain it is at prefent fomewhat:
higher,

THIi

*rHE WEALTH OF NATIONS.

283

The great rife in the price both of hogs and poultry has In ^^j^^'
Great Britain been frequently imputed to the diminution of the Vi^-y-y
number of cottagers and other fmall occupiers of land ; an event
which has in every part of Europe been the immediate fore-runner
of improvement and better cultivation, but which at the fame
time may have contributed to raife the price of thofe articles, both
fomewhat fooner and fomewhat fafter than it would otherwife have
rifen. As the pooreft family can often maintain a cat or a dog,
without any expence, fo the pooreft occupiers of land can commonly
maintain a few poultry, or a fow and a few pigs, at very little. The
little offals of their own table, their whey, Ikimmed milk, and
butter-milk, fupply thofe animals with a part of their food, and they
find the reft in the neighbouring fields without doing any fenfible
damage to any body. By-diminiftiing the num.ber of thofe fmall
occupiers, thei*efore, the quantity of this fort of provifions which
is thus produced at little or no expence, muft certainly have been
a good deal diminiftied, and their price muft confequently have
been raifed both fooner and fafter . than it would otherwife have
rifen. Sooner or later, however, in the progrefs of improvement,
it muft at any rate have rifen to the utmoft height to which it is
capable of rifing; or to the price which pays the labour and
expence of cultivating the land which furnifties them with food
as well as thefe are paid upon the greater part of other cultivated
land.

The bufinefs of the dairy, like the feeding of hogs and poultry.
Is originally carried on as a fave-all. The cattle neceffarily kept
upon the farm, produce more milk than either the rearing of their
own young, or the confumption of the farmer's family requires ;
and they produce moft at one particular feafon. But of all the
productions of land, milk is perhaps the moft periftiable. In
the warm feafon, when it is moft abundant, it will fcarce keep

O o 2 four

THE NATURE AND CAUSES OT

^ four and twenty hours. The farmer, by making it into frefli
-» butter, ftores a fmall part of it for a week: by making it into
fait butter,, for a year : and. by making it into cheefe,. he ftores
a much greater part of it for feveral years. Part of all thefe is
referved for the ufe of his own family. The reft goes to market,,
in order to find the beft price which is to be had, and which can-
fcarce be fo low as to difcourage him from fending thither what-
ever is over and above the ufe of his own family. If it is very
low, indeed, he will be likely to manage his dairy inr a very flovenly
and dirty manner, and will fcarce perhaps think it worth while
to have a particular room- or building on purpofe for it, but'
will fuffer the bufmefs- to be carried on amidft the fmoke, filth
and naftinefs of his own kitchen as was the cafe of almolt
all the farmers dairies in Scotland thirty or. forty years ago, and-
as is the cafe of many of them ftill. The fame caufes which-
gradually raife the price of butcher's-meat, the increafe of the:
demand, and, in confequence of the improvement of the country,,
tlie diminution of the quantity which can be fed at little or no.
expence, raife, in the fame manner, that of the. produce of the
dairy, of which the price naturally connects with, that of butcher's-
meat,. or with the expence of feeding cattle. The increafe of.
price pays for more labour, care, and cleanlinefs. The dairy be-
comes more v/orthy of the farmer's attention, and the quality of its-
produce gradually improves. The price at laft gets fo high that it
becomes worth while to employ fome of the moft fertile and beft
cultivated lands in feeding cattle merely for the purpofe of the dairy ;
and when it has got to this height, it cannot well go higher. If it
did, more land would foon be turned to this purpofe. It feems to,
have got to this height through the greater part of England,.
where much good land is commonly employed in this manner..
If you except the neighbourhood of a few confiderable towns,,
it feems not yet to have got to this height any where in Scotland,

where

THE WEALTH OF NATIONS.

where common farmers feldom employ much good land in raifing
food for cattle meiely for the purpofe of the dany. The price
of the produce, though it has rifen very confiderably within'
thefe. few years, is probably ftill too low to admit of it. The.
inferiority of the quality, indeed, compared with that of the
produce of EngUfh dairies, is fully equal to that of the price. -
But this inferiority of quality is,, perhaps, rather the effe6l of this
lownefs of price - than the caufe of it. Though the quality was
muck better, the greater, part of what is brought to market
could not, I apprehend, in the prefent circumftances of the
country, be difpofed of at a much better price ; and the prefent
price, it is probable, would not pay the expence of the land
and labour neceflary for producing a much better quality. Througlv
the- greater part of England,, notwithftanding the fuperiority of
price, the dairy is not reckoned a more profitable employment
of land than the raifing of corn, or the fattening of cattle, the.
two great obje6ls of agriculture. Through the greater part of
Scotland, therefore, it cannot yet be equally profitable.

The lands of no country, it is evident, can ever be compleatly
cultivated and improved, till once the price of every produce, which-
human induftry is obliged to raife upon them, has got fo high as
to pay for the expence of compleat improvement and cultivation.
In. order to do this, the price of each particular produce muft be
fufficient, firft, to pay the rent of good corn land, as it is that
which regulates the rent' of the greater part of other cultivated
land J and, fecondly, to pay the labour and expence of the farmec
as well as they are commonly paid upon good corn land ; or, in
other words, to replace with the ordinary profits the ftock which
he employs about it.. This rife in the price of each particular
produce, rauft evidently be. previous to the improvement and culti-
vation of the land which. is deftined for raifing it. Gain is the-

end

286

THE NATURE AND CAUSES OF

B O^O K end of all improvement, and nothing could deferve that name of
-J which lofs was to be the neceffary confequence. But lofs muft be
the neceffary confequence of improving land for the fake of a pro-
duce of which the price could never bring back the expence. If
the compleat improvement and cultivation of the country be, as
it moft certainly is, the greateft of all publick advantages, this rife
in the price of all thofe different forts of rude produce, inftead of
being confidered as a publick calamity, ought to be regarded as
the neceffary fore-runner and attendant of the greateft of all publick
.advantages.

This rife too in the nominal or money price of all thofe different
ibrts of rude produce has been the effe6l, not of any degradation
in the value of filver, but of a rife in their real price. They have
become worth, not only a greater quantity of filver, but a greater
quantity of labour and fnbfiftence than before. As it cofts a
greater quantity of labour and fubfiftence to bring them to market,
fo when they are brought thither, they reprefent or are equivalent
N to a greater quantity.

Third Sort,

The third and laft fort of rude produce, of which the price
naturally rifes in the progrefs of improvement, is that in which the
efficacy of human induftry, in augmenting the quantity, is either
limited or uncertain. Though the real price of this fort of rude
produce, therefore, naturally tends to rife in the progrefs of im-
provement, yet, according as different accidents happen to render
the efforts of human induftry more or lefs fuccefsful in augment-
ing the quantity, it may happen fometimes even to fall, fometimes
to continue the fame in very different periods of improvement, and
fometimes to rife more or lefs in tlie fame period.

There

THE. WEALTH OF NATIONS.

There are fome forts of rude produce which nature has ren- C
dered a kind of appendages to other forts ; fo that the quantity of
the one which any country can afford, is necelTarily limited by that
of the other. The quantity of wool or of raw hides, for example,
which any country can afford, is neceffarily limited by the number
of great and fmall cattle that are kept in it. The ftate of its
improvement and the nature of its agriculture, again neceffarily
determine tliis number.

The fame caufes, which in the progrefs of improvement, gra-
dually raife the price of butcher's-meat, fhould have the fame
effe6l, it may be thought, upon the prices of wool and raw hides,
and raife them too nearly in the fame proportion. It probably
would be fo, if in the rude beginnings of improvement the market
for the latter commodities was confined within as narrow bounds as
that for the former. But the extent of their refpeftive markets is
commonly extreamly different.

The market for butcher's-meat is almofl every where confined:
to the country which produces it. Ireland, and fome part of
Britifh America indeed, carry on a confiderable trade in fait pro-
vifions ; but they are, I believe, the only countries in the com-
mercial world which do fo, or which export to other countries any/
confiderable part of their butcher's-meat.

The market for wool and raw Hides, on the contrary, is in-
the rude beginnings of improvement very feldom confined to the
country which produces them. They can eafily be tranfported to
diflant countries, wool without any preparation, and raw hides
with very little ; and as they aie the materials of many manufac-
tures, the induflry of other countries may occafion a demand for.

4 them,.

288 THE NATURE AND CAUSES OF

B O^O K them, though that of th« counrtry v/hich produces them might
jiot occafion any.

In countries ill cultivated, and therefore Lut thinly inhabited,
the price of the wool and the hide bears always a much greater
•proportion to that of the whole beaft, than in countries where^
improvement and population being further advanced, there is more
demand for butcher's -meat. Mr. Flume obferves, that in the
Saxon times, the fleece was eftimated at two-fifths of the value
of the whole flieep, and that this was much above the proportion
.of its prefent eftimation. In fome provinces of Spain, I have
been alTured, the flieep is frequently kilkd merely for the fake of
the fleece and the tallow. The carcafe is often left to rot upon
the ground, or to be devoured by beafls and birds of prey. If
this fometimes happens even in Spain, it happens almofl: confl:antly
in Chilis at Buenos Ayres, and in many other parts of Spanifli
America, where the horned cattle are almoft conftantly killal
■merely for the fake of the hide and the tallow. This too ufed to
jiappen almofl: conftantly in Hilpaniola, while it was infefted by
the Buccaneers, and before the fettlement, improvement and popu-
loufnefs of the French plantations (which now extend round tlie
coaft of almoft the whole weftern half of the ifland) had given
fome value to the cattle of the Spaniards, who ftill continue to
poflefs, not only the eaftern part of the coaft, but the whole inland
and mountainous part of the country.

Though in the progrefs of improvement and population, the
price of the whole bcaft neceflarily rifes, yet the price of the carcafe
is likely to be much more afFe6\ed by this rife than that of the
wool and the hide. The market for the carcafe, being in the rude
ftate of fociety confined always to the country which produces it,
rauft necefllirily be extended in proportion to the improvement
7 V and

THE WEALTH OF NATIONS. 289

and papulation of that country. But the market for the wool and C H^A P.
the hides even of a barbarous country often extending to the whole u»-v- »^
commercial world, it can very feldom be enlarged in the fame
proportion. The ftate of the whole commercial world can feldom
be much affe6led by the improvement of any particular country ;
and the market for fuch commodities may remain the fame or very
nearly the fame, after fuch improvements, as before. It fhould
however in the natural courfe of things rather upon the whole be
fomewhat extended in confequence of them. If the manufa<5lures,
efpecially, of which thofe commodities are the materials, fhould
ever come to flourifh in the country, the market, though it might
not be much enlai'ged, would at leaft be brought much nearer to
the place of growth than before j and the price of thofe materials
might at leaft be increafed by what had ufually been the expence
of tranfporting them to diftant countries. Though it might not
rife therefore in the fame proportion as that of butcher's -meat, it
ought naturally to rife fomewhat, and it ought certainly not to
fall.

In England, however, notwithftanding the flourifhing ftate of
its woollen manufa6lure, the price of Englifti wool has fallen very
confiderably fince the time of Edward III. There are many
authentick records which demonftrate that during the reign of that
prince (towards the middle of the fourteenth century, or about
1339) what was reckoned the moderate and reafonable price of the
tod or twenty-eight pounds of Englifh wool was not lefs than ten
ftiillings of the money of thofe times *, containing, at the rate of
twenty-pence the ounce, fix ounces of ftlver Tower-weight, equal
to about thirty ftiillings of our prefent money. In the prefent
times, one and twenty ftiillings the tod may be reckoned a good

Vol. I. P p price

* See Smith's Memoirs of Wool.

290 THE,- NAJ,VR£oAt}15 jg^U#ESi pf

B O^OK price for very good Englifh wool. The money-price of wooI>,
w-/-^ therefore, in the time of Edward III, was to its money-price in the
prefent times as ten to feven. The fuperiority of its real price was
ftill greater. At the rate of fix {hillings and eight-pence the quar-
ter, ten (hillings was in thofe ancient times the price of twelve
bufhels of wheat. At the rate of twenty-eight fhillings the quarter j,.
one and twenty fliillings is in the prefent times the price of fix
bufhels only. The proporfion between the real prices of ancient
and modern times, therefore, is as twelve to fix, or as two to one,.
In thofe ancient times a tod of wool would- have purchafed twice
the quantity of fubfiftence which it will purchafe at^ prefent ; and
confequently twice the quantity of labour, if the realrecompence
of labour had been the fame in both periods..

This degradation both in the real and nominal, value: of wool
could never have happened in confequence of the natural courfe of
things. It has accordingly been the effe6l of violence and artifice i
Firft, of the abfolute prohibition of exporting wool from Eng-
land J Secondly, of the permiflion of importing it from all othe^
countries duty free ; Thirdly, of the prohibition of exporting it
from Ireland to any other country but England. In confequence
of thefe regulations^ the market for Englifh wool, inftead of
being fomewhat extended ih confequence of the improvement of
England, has been confined to the home market, where the wool
of all other countries is allowed' to come into competition with
it, and where that of Ireland is forced into competition with it.
As the woollen manufadures too of Ireland are fully as much dif-
couraged as is confiftent with juftice and' fair dealing, the Irifh
can work up but a fmall part of their own wool at home, and
are, therefore, obliged to fend a greater proportion of it to Gjreat
Britain, the only market they are allowed.

I HAVE

THE -mjiLm'orwA'riomj

291

i ViAVE not been able to find any fuch authentick records con-
cerning the price of raw hides in ancient times. Wool was com-
monly paid as a fubfidy to the king, and its valuation in that fubfidy
afcertains, at leaft in fome degree, what was its ordinary price.
But this feems not to have been the cafe with raw hides. Fleet-
wood, however, from an account in 1425, between the prior of
Burcefter Oxford and one of his canons, gives us their price, at
leaft as it was ftated, upon that particular occafion : viz. five ox
hides at twelve {hillings ; five cow hides at feven fhillings and
three-pence ; thirty- fix ftieeps fkins of two years old at nine fhil-
lings ; fixteen calves Ikins at two fhillings. In 1425, twelve {hil-
lings contained about the fame quantity of fi!ver as four and twenty
fhillings of our prefent money. An ox hi<;le, therefore, was in
this account valued at the fame quantity of filver as 4s. ±ths
of our prefent money. Its nominal price was a good deal lower
itian at prefent. But at the rate of fix fliiUings and eight-pence
the quarter, twelve (hillings would in thofe times have purchafed
fourteen bufhels and four-fifths of a bufhel of wheat, which, at
three and fix-pence the bufhel, would in the prefent times coft
51s. 4d. An ox hide, therefore, would in thofe times have
purchafed as much corn as ten fhillings and three-pence would
purchalfi at prefent. Its real value was equal to ten fhillings
and three-pence of our prefent money. , In thofe ancient times,
when the cattle were half ftai*ved during the greater part of the
winter, we cannot fuppofe that they were of a very large fize. An
ox hide which weighs four ftone of fixteen pounds averdupois, is
not in the prefent times reckoned a bad one ; and in thofe ancient
times would probably have been reckoned a very good one. But
at half a crown the ftone, which at this moment (February, 1773)
I underftand to be the common price, fuch a hide would at prefent
coft only ten fhillings. Though its nominal price, therefore, is
higher in the prefent than it was in thofe ancient times, its real
' ■ ' - P p 2 price.

THE NATURE AND CAUSES OF

BOOK price, the real quantity of fubfiftence which it will purchafe or
^^J^ command, is rather fomewhat lower. The price of cow hides, as
ftated in the above account, is nearly in the common proportion to
that of ox hides. That of flieep fkins is a good deal above it.
They had probably been fold with the wool. That of calves fkins,
on the contraiy, is greatly below it. In countries where the
price of cattle is very low, the calves, which are not intended to be
reared in order to keep up the ftock, are generally killed very
young ; as was the cafe in Scotland twenty or thirty years ago.
It faves the milk, which their price would not pay for. Their fkins,
therefore, are commonly good for little.

The price of raw hides is a good deal lower at prefent
than it was a few years ago ; owing probably to the taking off
the duty upon feal fkins, and to the allowing, for a limited time,
the importation of raw hides from Ireland and from the plantations
duty free, which was done in 1769. Take the whole of the
prefent century at an average, their real price has probably been
fomewhat higher than it was in thofe ancient times. The nature
of the commodity renders it not quite fo proper for being tran-
fported to diftant markets as wool. It fufFers more by keeping.
A faked hide is reckoned inferior to a frefti one, and fells for a
lower price. This circumflance mufl necefTarily have fome ten-
dency to fmk the price of raw hides produced in a country which
does not manufafture them, but is obliged to export them and
comparatively to raife that of thofe produced in a country which
does manufacture them. It muft have fome tendency to fink their
price in a barbarous, and to raife it in an improved and manu-
fadluring country. It muft have had fome tendency therefore to
fmk it in ancient, and to raife it in modern times. Our tanners
befides have not been quite fo fuccefsful as our clothiers in con-
vincing the wifdom of the nation that the fafety of the common-

. wealth

THE WEALTH OF NATIONS. 29

wealth depends upon the profperity of then- particular manufadure. CHAP.
They have accordingly been much lefs favoured. The exportation (--^i^
of raw hides has, indeed, been prohibited, and declared a nui-
fance : but their importation from foreign countries has been
fiabjefted to a duty; and though this duty has been taken off from
thofe of Ireland and the plantations (for the Hmited time of five
years only) yet Ireland has not been confined to the market of
Great Britain for the fale of its furplus hides, or of thofe which are
not manufactured at home. The hides of common cattle have
but within thefe few years been put among the enumerated commo-
dities which the plantations can fend nowhere but to the mother
country ; neither has the commerce of Ireland been in this cafe
oppreffed hitherto in order to fupport the manufactures of Great.
Britain.

Whatever regulations tend to fink the price either of wool
or of raw hides below what it naturally would be, mufl, in an
improved and cultivated country, have fome tendency to raife the
price of butcher's meat. The price both of the great and fmall
cattle, which are fed on improved and cultivated land, mufl be
fufficient to pay the rent which the landlord, and the profit which
the farmer has reafon to expc6l from improved and cultivated
land. If it is not, they will foon ceafe to feed them. Whatever
part of this price, therefore, is not paid by the wool and the hide,
muft be paid by the carcafe. The lefs there is paid for the one,
the more muft be paid for the other. In what manner this price
is to be divided upon the different parts of the beaft, is indifferent
to the landlords and farmers, provided it is all paid to them. In
an improved and cultivated country, therefore, their intereft as
landlords and farmers cannot be much affeCled by fuch regula-
tions, though their intereft as confumers may, by the rife in the
price of pro vifions. It would be quite otherwife, however, in an
4 imimproved

494 TM'fe^WX^^Rt'^AND CAUSE^^

BOOK unimproved and uncultivated country, where the greater part of
^..--Y^ the lands could be applied to no other purpofe but the feeding <)f
cattle, and wherc the wool and the hide made the principal part of
the value of thofe cattle. Their intereft as landlords and farmers
would in this cafe be very deeply affe6led by fuch regulations, and
their intereft as confumers very little. The fall in the price of the
wool and the hide, would not in this cafe raife the price of the
carcafe j becaufe the greater part of the lands of the country being
applicable to no other purpofe but the feeding of cattle, the fame
number would ftill continue to be fed. The fame quantity of
butcher's-meat would ftill come to market. The demand for it
would be no greater than before. Its price, therefore, would be
the fame as before. The whole price of cattle would fall, and
along vyith it both the rent and the profit of all thofe lands of which
cattle was the principal produce, that is, of the greater part of the
lands of the country. The perpetual prohibition of the exportation
of wool which is commonly, but very falfely, afcribed to Edward
III, would, in the then circumftances of the country, have been
the moft deftru6live regulation which could well have been thought
of. It would not only have reduced the a£lual value of the greater
part of the lands of the kingdom, but by reducing the price of the
moft important fpecies of fmall cattle, it would have retarded very
much its fubfequent improvemen^^p 13 r

The wool of Scotland fell very confiderably in its price in con-

fequence of the union with England, by which it was excluded from

the great market of Europe, and confined to the narrow one of

Great Britain. The value of the greater part of the lands in the

fouthern counties of Scotland, which are chiefly a flieep country,

would have been very deeply affe6led by this event, had not the

rife in the price of butcher's-meat fully compenfated the fall in the

price of wool.

7 As

THE WEALTH OF NATIONS.

i,- As the efficacy of human iiiduftry, in increafing the quantity C
either of wool or of raw hides, is limited, fo far as it depends upon
■ the produce of the country where it is exerted ; fo it is uncertain fo
far as it depends upon the produce of other countries. Jt fo far
depends, not fo much upon the quantity which they produce, as
upon that which they do not manufacture j and upon the reftraints
which they may or may not think proper to impofe upon the ex-
portation of this fort of rude produce. Thefe circumftances, as
they are altogether independent of domeftick induflry, fo they
neceflarily render the efficacy of its efforts more or lefs uncertain.^
In multiplying this fort of rude produce, therefore,^ the efficacy of
human indaftry is not only limited, but uncertain. 3 -bitjo v

In multiplying another very important fort of mde produce,
the quantity of fiHi that is brought to market, it is likewife both
Hmited and uncertain. It is limited by the local fltuation of the
country, by the proximity or diftance of its different provinces
from the fea, by the number of its lakes and rivers, and by what
may be called the fertility or barrennefs of thofe feas, lakes and
livers, as to this fort of rude produce. As population increafes, as
the annual produce of the land and labour of the country grows
greater and greater, there come to be more buyers of fifn, and
thofe buyers too have a greater quantity and variety of other goods,
or, what is the fame thing, the price of a greater quantity and
variety of other goods, to buy with. But it will generally be im-
poffible to fupply the great and extended market without employing a
quantity of labour greater than in proportion to v/hat had been re-
quifite for fupplying the narrow and confined one. A market which,
from requiring only one thoufand, comes to require annually ten
thoufand tun of fifli, can feldom be fupplied without employing
more than ten times the quantity of labour which had before been;
Efficient to fupply it. Tlie fifh muft generally be fought for at a,,

greater

2^6 THE NATURE AND "CAUSES OF

B O^O K greater cliftance, larger veflels muft be employed, and more ex-
' penfive machinery of every kind made ufe of. The real price
of this commodity, therefore, naturally rifes in the progrefs of
improvement. It has accordingly done fo, I believe, more or lefs
in every countiy.

Though the fuccefs of a particular day's fifhing may be a very
uncertain matter, yet, the local fituation of the country being
fuppofed, the general efficacy of induftry in bringing a certain
quantity of fifli to market, taking the courfe of a year, or of
feveral years together, it may perhaps be thought, is certain
enough ; and it, no doubt, is fo. As it depends more, however,
upon the local fituation of the country, than upon the ftate of
its wealth and induftry j as upon this account it may in different
countries be the fame in very different periods of improvement,
and very different in the fame period ; its conne(?tion with the ftate
of improvement is uncertain, and it is of this fort of uncertainty
that I am here fpeaking.

In increafing the quantity of the different minerals and metals
which are drawn from the bowels of the earth, that of the more
precious ones particularly, the efficacy of human induftry feems
not to be limited, but to be altogether uncertain.

The quantity of the precious metals which is to be found in
any country is not limited by any thing in its local fituation, fuch
as the fertility or barrennefs of its own mines. Thofe metals
frequently abound in countries which poffefs no mines. Their
quantity in every particular country feems to depend upon two dif-
ferent circumftances j firft, upon its power of purchafing, upon the
ftate of its.,induftry, upon the annual produce of its land and la-
bour, in confequence of which it can afford to employ a greater

THE

WEALTH OF NATIONS.

dr B. fmaller quantity of labour and fubfiftence in bringing or CHAP,
il^urchafing fuch fupei'fluities as gold and filver, either from its own ».,..-v-^
•tnines or from thofe of other countries; and, fecondly, upon the
fertility or barrennefs of the mines which may happen at any
particular time to fupply the commercial world with thofe metals.
The quantity of thofe metals in the countries moft remote from
the mines, muft be more or lefs affeded by this fertility or barren-
nefs, on account of the eafy and cheap tranfportation of thofe
metals, of their fmall bulk -and great value. Their quantity in
China and Indoftan muft have been more or lefs affe6led by the
abundaricfe of the mines of America.

So far as tbeir quantity in any particular country depends upon
the former of thofe two circumftances (the; power of purchafmg)
their real price, like that of all other luxuries and fuperfluities, is
likely to rife with the wealth and improvement of the country, and
'to fall with its poverty and deprellion. Countries which have a
•greflt quantity of labour and fubfiftence to fpare, can afford to
purehafe any particular quantity of thofe metals at the expenceof
a greater quantity of labour, and . fubfiftence, than countries whiGh
have' Icfs to ' fpare.

So far as their quantity in any particular country depends upon
the latter of thofe two circumftances (the fertiUty or barrennefs of
the mines which happen to fupply the commercial world) their
real price, the real quantity of labour and fubfiftence which they
•will purchafe or exchange for, will, no doubt, fink more .or lefs
in proportion to the fertihty, and rife in proportion to the barren-
nefs of thofe mines.

The ferfility or barrennefs of the tnines, however, which may
happen at any ' particular ' time to fupply the commercial world.
Vol. I. Qt^q is

THE NATURE AND CAUSES OF

B O^O K js a circumftance which, it is evident, may have no fort of con-
c»'-v-w ne6tion v^ith the ftate of induftry in a particular country. It feems
even to have no very neceflary connection with that of the world
in general. As arts and commerce, indeed, gradually fpread
themfelves over a greater and a greater part of the earth, the fearch
for new mines, being extended over a wider furface, may have
fomewhat a better chance for being fuccefsful, than when confined
within narrower bounds. The difcovery of new mines, however,
as the old ones come to be gradually exhaufted, is a matter of the
greateft uncertainty, and fuch as no human fkill or induftry can
enfure. All indications, it is acknowledged, are doubtful, and
the aClual difcovery and fuccefsful working of a new mine can
alone afcertain the reality of its value, or even of its exiftence. In
tliis fearch there feem to be no certain limits either to the pofTible
fuccefs, or to the poffible difappointment of human induftry. In the
courfe of a century or two, it is poflible that new mines may be
difcovered more fertile than any that have ever yet been known;
and it is juft equally poffible that the moft fertile mine then known
may be more barren than any that was wrought before the dif-
covery of the mines of America. Whether the one or the other
of thofe two events may happen to take place, is of very little im-
portance to the real wealth and profperity of the world, to the
real value of the annual produce of the land and labour of man-
kind. Its nominal value, the quantity of gold and filver by which
this annual produce could be expreffed or reprefented, would, no
doubt, be very different j hut its real value, the real quantity of
labour which it could purchafe or command, would be precifely
the fame. A ftiilling might in the one cafe reprefent no more la-
bour than a penny does at prefent; and a penny in the other might
reprefent as much as a fhillirig does now. But in the one cafe
he who had a ftiilling in his pocket, would be no richer than he
who has a penny at prefent; and in the other he who had a penny

would

THE WEALTH OF^ ISTATlO^r

*99

Would be juft as rich as he who has a fliilling now. The cheapnefs 0 HA P.
and abundance of gold and filver plate, would be the fole advantage u-
which the world could derive from the one event, and the dear-
nefs and fcarcity of -thofe trifling fuperfluities the only inconveniency
it could fufFer from the other. - y. o i.//. mi.s/l

Condufion of the DigreJJion. concerning the Variations in the Value

of Silver,

The greater part of the writers who have collefled the money
prices of things in antient times, feem to have confidered the
low money price of corn, and of goods in general, or, in other
words, the high value of gold and filver, as a proof, not only of
the fcarcity of thofe metals, but of the poverty and barbarifm of
the-couatry at the time when it took place. This notion is con-
i^efled with the fyftem of political oeconomy which reprefents na-
tional wealth as confifting in the abundance, and national poverty
in the fcarcity of gold and filver; a fyftem which I (hall endeavour
to explain and examine at great length in the fourth book of this
enquiry. I fhall only obferve at prefent, that the high value of the
precious metals can be no proof of the poverty or barbarifm of
any particular country at the time when it took place. It is a
proof only of the barrennefs of the mines which happened at that
time to fupply the commercial world. A poor country, as it
cannot afford to buy more, fo it can as little afford to pay dearer
for gold and filver than a lich.one^ and the value of thofe metals,
therefore, is not likely to be higher in the former than in tlie
latter. In China, a country much richer than any p?rt of Eu-
rope, the value of the precious metals is mucli I Jgher than in any
part of Europe. As the wealth of Europe, indeed, has increafed
greatly fince the difcovcry of the mines of America, fo the value

CLq 2 of

THE NATURE AND CAIfSE$ OF

WOO Et of g,o.y artd! filver lias gradually dirrvmiflie^. This dtfiw^ipii..

w-v^— tlieir value> feowever, hd& not been owing tp the inejejaie oC thfi
real wcakh of Eiiii*Qpe, ©f the annieil pEo^uee of lan4 ai;i<i lam
botir^ but to tke accidental difcovery of moi'e abiocndant r^ines tliaa
any that were known before. The inereafe of ti>e quantity of g©l4
and filver in Europe, and the increafe of its manufadlures and agri-
culture, are two events which, though they have happened nearly
about the fame time, yet have arifen from very different eaufes^
and have fcarce any natural conne6lion with one another. The
one has arifen from a mere accident,, in which neither prudence
jior policy either had or could have any fhare : The other from
the fall of the feudal fyftem, and from the eftabliftiment of a
government which afforded to induftry, the only encouragement
which it requires, fome tolerable feeurity that it fhaU enjoy the
fruits of its own labour. Poland, where the feudal fyftem ftill
continues to take place, is at this day as beggarly a country as it
was before the difcovery of America. The money price of corn,,
however, has rifen ; the real value of the precious metals has fallen
in Poland, in the fame manner as in other parts of Europe. Their
quantity, therefore, muft have increafed there as in other places,
and nearly in the fame proportion to the annual produce of its
land and labour. This increafe of the quantity of thofe metals,
however, has not,, it feems, increafed that annual produce, has
neither improved the manufatJtuies and agiiculture of the country,
nor mended the circumftances of its inhabitants. Spain and Por-
tugal, the countries which poflefs the mines, are, after Poland,
perhaps, the two moft beggarly countries in Europe. The value
of the precious metals, however, muft be lower in Spain and
Portugal than in any other part of Europe; as they come from
thofc countries to all other parts of Europe, loaded, not only witli
a freight and an infurance, but with the expence of fmuggling,
their exportation being either prohibited, or fubjecled to a duty. In
, > proportion.

THE Yfi;^L;T'i^ C^r N^ATIQIf S,

proportloa to. the annual, proijuce of the. laad an4, labpur, there- C
fore, tlielr quanti^ty muft bp greater in thofe cppntri.es than in any,
other part of Europe Thof9 countries, h9wever, arQ. poorer thai)
the greater part of Ei^pp^. Though the. feudal fy^env has been
aboHfhed in Spain and Portugal, it has upt beea fucceeded by a
much better.

As the low value of gold and filver, therefore, is no proof of the
wealth and flourifhing ftate of the country where it takes places
fo neither is their high value, or the low money price either of
goods in general or of corn in particular, any proof of its poverty
and barbarifm. ' ^

But though the low money price either of goods in general, or
'of corn in particular, be no proof of the poverty or barbarifm of
the times, the low money price of Ibme particular forts of goods,
fuch as cattle, poultry, game of all kinds, in proportion to that
of corn, is a moft decifive one. It clearly demonflrates, firfl, their
great abundance in proportion to that of corn, and confequently
the great extent of the land which they occupied in proportion to
' what was occupied by com; and, fecondly, the low value of this>
land in proportion to that of corn land, and confequently the un-
cultivated and unimproved ftate of the far greater part of the landa
of the country. It clearly demonftrates that the flock and popu-
lation of the country did not bear the fame proportion to the ex-
tent of its territoi*y, which they commonly do in civilized countries,,
and that fociety was at that time, and in that country, but in its-
'infancy. From the high or low money price either of goods in
general, or of corn in particular, we can infer only that the mines
which at that time happened to fupply the commercial world with
gold and filyer, were fertile or barren, not that the country was
rich or poor. But from the high or low money price of fome
' Ibrts

502 THE NATURE AND CAUSES O'F

B O^O K forts of goods in proportion to that of others, we can infer with'a
L^'^y'— .»> degree of probabihty that approaches almoft to certainty, that it
was rich or poor, that the greater part of its lands were improved
or unimproved, and that it was either in a more or l&fs barbarous
. ftate, or in a more or lefs civilized one.

Any rife in the money price of goods which proceeded altogether
■from the degradation of the value of lilver, would affe^l all forts
of goods equally, and raife their price univerfally a third, or a
fourth, or a fifth part higher, according as filver happened to
lofe a third, or a fourth, or a fifth part of its former value. But
the rife in the price of provifions, which has been the fubje6t of
' fo much reafoning and converfation, does not affed: all forts of
-provifions equally. Taking the courfe of the prefent century at
an average, the price of corn, it is acknowledged, even by thofe
who account for this rife by the degradation of the value of filver,
has rifen much lefs than that of fome other forts of provifions.
The rife in the price of thofe other forts of provifions, therefore,
• cannot be owing altogether to the degradation of the value of
, filver. Some other caufes mull be taken into the account, and
thofe which have been above affigned, will, perhaps, without
having recourfe to the fuppofed degradation of the value of filver,
.fufRciently explain this rife in thofe particular forts of provifions
of which the price has actually rifen in proportion to that of
corn.

As to the price of corn itfelf, it has, during the fixty-four firft
-years of the prefent century, and before the late extraordinary courfe
of bad feafons, been fomewhat lower than it was during the fixty-
four laft years of the preceding century. This fa6t is atteffed,
not only by the accounts of Windfor market, but by the pubiick
if ars of all the different counties of Scotland, and by the accounts

THE WEALTH OF NATIONS.

303

of feveral different markets in France, which have been colle6led CHAP.

with great dihgence and fidelity by Mr. Meffance and by Mr.
Dupre de St. Maur. The evidence is more compleat than could
vy^ell have been expe6led in a matter which is naturally fo very
difficult to be afcertained.

As to the high price of corn during thefe laft ten or twelve years,
it can be fufficiently accounted for from the badnefs of the feafons,
without fuppofing any degradation in the value of filver.

The opinion, therefore, that filver is continually finking in
its value, feems not to be founded upon any good obfervationsj^
either upon the prices of corn, or upon thofe of other provi-
fions.

The fame quantity of filver, it may, perhaps, be faid, willin
the prefent times, even according to the account which has been
here given, pvirchafe a much fmaller quantity of feveral forts of
'"^provifions than it would have done during fome part of the laft
fcentury ; and to afcertain whether this change be owing to a rife
jin the value of thofe goods,, or to a fall in the value of filver, is only
,to eftablifh a vain and ufelefs diftinftion, which can be of no fort
of fervice to the man who has only a certain quantity of filver to
go to market with, or a certain fixed revenue in money. I cer-
tainly do not pretend that the knowledge of this diftin6lion will
enable him to buy cheaper. It may not, however, upon that
account, be altogether ufelefs.

It may be of fome ufe to the publick by affording an eafy proof
of the profperous condition of the country. If the rife in the price
of fome forts of provifions be owing altogether to a fall in the
-:'.tYalue of filver, it is owing to a circumflance from which nothing
)j 4 caa

'l^ THE ^NaViJRE A'ND CAU-SES -OV

B bo k 'icsn 'be rnfefr^H "but the fertility 6f t\k -Anfierhesn ^miiifes. *Thfc
'']^eal wealth of the country/ the Wriifel prodiice '^f its land and
labour, m^, notWithftandihg this circumftartce, be either gra-
tliiallydecHmng, as^in Portugal and PoTand; or gradually advancing',
as in moft other parts of Europe. But if this rife in the price
of fome forts of provifions be owing to a rife in the real value
of the land which produces them, to its iftcreafed fertility, or,
in confequence of more extended improvement and good culti-
vation, to its having been rendered fit for producing corn, it is
owing to a circumftance which indicates in the cleareft manner
the profperous and advancing ftate of the countiy. The knd
conftitutes by far the greateft, the moft important, and the moft
durable part of the wealth of every extenfive country. It may
furely be of fome ufe, or, at leaft, it may give fome fatisfa6tion to the
publick, to have fo decifive a proof of the increafing value of by
far the 'greateft, the moft important, and the moft durable part
of its wealth.

It may too be of fome ufe to the publick in regulating the
"^^ecuniary reward of fome of its inferior fervants. If this rife
•'in the price of fome forts of provifions be owing to a fall
' in the value of filver, their pecuniary reward, provided it was
not too large before, ought certainly to be augmented in propor-
tion to the extent of this fall. If it is not augmented, their real
recompence will evidently be fo much diminiftied. But if this
rife of price is owing to the increafed value, in confequence of
the improved fertility of the land which produces fuch provifions,
it becomes a much nicer matter to judge either in what proportion
'■any pecuniary reward ought to be augmented, or whether it ought
to be augmented at all. The extenfion of improvement and
' cultivation, as it necelTarily raifes more or lefs, in proportion to the
price of com, that of every fort of animal food, fo it as neceffa-

rily

"the wealth of nations

riJy lowers that of, I believe, every fort of vegetable food. It ralfes C
the price of animal food ; becaufe a great part of the land which
produces it, being rendered fit for producing corn, muft afford
to the landlord and farmer the rent and profit of corn land. It
lowers the price of vegetable food; becaufe by increafmg the
fertility of the land, it increafcs its abundance. The improve-
ments of agriculture too introduce many forts of vegetable
food, which, requiring lefs land and not more labour than corn,
come much cheaper to market. Such are potatoes and maize, or
what is called Indian corn, the two mofl important improvements
which the agriculture of Europe, perhaps which Europe itfelf
has received from the great extenfion of its commerce and navi-
gation. Many forts of vegetable food befides, which in the
rude ftate of agriculture are confined to the kitchen garden, and
raifed only by the fpade, come in its improved ftate to be intro-
duced into common fields, and to be raifed by the plough : fuch
as turnips, carrots, cabbages, &c. If in the progrefs of im-
provement, therefore, the real price of one fpecies of food ne-
cefTarily rifes, that of another as necefTarily falls, and it becomes
a matter of more nicety to judge how far the rife in the one may
be compenfated by the fall in the other. When the real price
of butcher's meat has once got to its height, (which, with regard
to eveiy fort, except perhaps that of hogs flefh, it feems to have
<lone through a great part of England, more than a century ago)
any rife which can afterwards happen in that of any other fort
of animal food, cannot njuch affe6l the circumflances of the
inferior ranks of people. The circumflances of the poor through
a great part of England cannot furely be fo much diftrelTed by
any rife in the price of poultry, fifh, wild-fowl, or veuifon, as they
muft be relieved by the fall in that of potatoes.

In the prefent feafon of fcarcity the high price of corn no
doubt diftreffes the poor. But in times of moderate plenty, when
Vol. I. R f com

3o6 THE NATURE AND CAUSES OF

B O^O K com is at its ordinary or average price, the natural rife in the price
u>^--^ of any other fort of rude produce cannot much afFe6l them.

They fuffer more, perhaps, by the artificial rife which has been
occafioned by taxes in the price of Ibme manufactured com-
modities; as of fait, foap, leather, candles, malt, beer and
ale, &c.

EffeSis of the Progrefs of Improvement upon the real Price of

Manufactures^

J T is the natural efte6l of improvement, however, to diminifii
gradually the real price of almoft all manufa6lures. That of
the manufadluring v/orkmanftiip diminiflies perhaps in all of them
without exception. In confequence of better machinery, of
greater dexterity, and of a more proper divifion and diftribution.
of work, all of which are the natural effe6ts of improvement,,
a much fmaller quantity of labour becomes requifite for executing
any particular piece of work ; and though in confequence of the
flourifhing eircumftances of the fociety, the real price of labour
fhould rife very confiderably, yet the great diminution of the
quantity will generally much more than compenfate . the greateft
rife which can happen in the price..

There are, indeed, a few manufa6tures, in which the neceflary
rife in the real price of the rude materials will more than com-
penfate all the advantages which improvement can introduce into -
the execution of the work. In carpenters and joiners work, and
in the coarfer fort of cabinet work, the necelTary rife in the real
price of barren timber, in confequence of the improvement of
land, will more than compenfate all the advantages which can

THE WEALTH OF NATIONS.

be derived from the beft machinery, the greateft dexterity, and C H^A P.
the mofl proper divifion and diftribution of work. u»"v*^

But in all cafes in which the real price of the rude materials
either does not rife at all, or does not rife very much, that of
the manufa6tured commodity fmks very confiderably.

This diminution of price has, in the courfe of the prefent
and preceeding century, been moft remarkable in thofe manu-
fa6lures of which the materials are the coarfer metals. A better
movement of a watch, than about the middle of the laft century
could have been bought for twenty pounds, may now perhaps
be had for twenty Ihillings. In the work of cutlers and lock-
fmiths, in all the toys which are made of the coarfer metals,
and in all thofe goods which are commonly known by the name
of Birmingham and Sheffield ware, there has been, during the
fame period, a very great redu£lion of price, though not alto-
gether fo great as in watch work. It has, however, been fuf-
ficient to aftonilh the workmen of every other part of Europe,
who in many cafes acknowledge that they can produce no work
of equal goodnefs for double, or even for triple the price. There
are ])erhaps no manufa6lures in which the divifion of labour can ,
be carried further, or in which the machinery employed admits
of a greater variety of improvements, than thofe of which the
materials are the coarfer metals.

>«

In the clothing manufaiSlure there has, during the fame period,
been no fuch fenfible redu6lion of price. The price of fuperfine
cloth, I have been aflured, on the contrary, has, within thefe
five and twenty or thirty years, rifen fomewhat in proportion to
its quality ; owing, it was faid, to a confiderabie rife in the price
of the material, which coniifts altogether of Spanifh wool. That

R r 2 of

3o8

THE NATURE AND CAUSES OF

BO^O K of the Yorkfhire cloth, which is made altogether of Englifh woo!,
v>»-"y'-^ is faid indeed, during the courfe of the prefent century, to have
fallen a good deal in proportion to its quality. Quality, however
is fo very difputable a matter,^ that I look upon all informations
of this kind as fomewhat uncertain. In the clothing manu-
fadure, the divifion of labour is nearly the fame now, as it was
a century ago, and the machinery employed is not very different.
There may, however, have been feme fmall improvements in both,.
which may have occafioned fome redu6lion of price.

The redu6lion, however, will appear much more fenfible and
undeniable, if we compare the price of this manufafture in the
prefent times with what it was in a much remoter period, towards
the end of the fifteenth century, when the labour was probably
much lefs fubdivided, and the machinery employed much more
imperfect than it is at prefent..

In 1487, being the 4th of Henry Vllth, it was enafled, that
" whofoever fhall fell by retail a broad yard of the finefl fcarlet
** grained, or of other grained cloth of the fineft making, above
** fixteen fhillings, fliall forfeit forty fhillings for every yard fo
' '* fold." Sixteen fliilhngs, therefore, containing about the fame

quantity of iilver as four and twenty fliillings of our prefent
money, was, at that time, reckoned not an unreafonable price
for a yard of the, finefl cJoth ; and as this is a fumptuary law,,
fuch cloth, it is probable, had ufually been fold fomewhat dearer.
A guinea may be reckoned the highefl price in the prefent times.
Even though the quality of the cloths, therefore, fhould be fup-
pofed equal, and that of the prefent times is moft probably much
fuperior, yet, even upon this fuppofition, the money price of
the fineft cloth appears to have been conliderably reduced fince
the end of the fifteenth century. But its real price has been

much

THE WEALTH OF NATIONS. 301

much more reduced. Six fhillings and eight-pence was then, CHAP,
and long afterwards, reckoned the average price of a quarter
of wheat. Sixteen ftiiUings, therefore, was the price of two
quarters and more than three bufhels of wheat. Valuing
a quarter of wheat in the prefent times at eight and twenty
fhillings, the real price of a yard of fine cloth muft, in thofe
times, have been equal to at leaft three pounds fix fliillings
and fixpence of our prefent money. The man who bought
it muft have parted with the command of a quantity of labour
and fubfiftence equal to what that fum would purchafe in the
prefent times.

The redu6lion in the real price of the coarfe manufa6lure,.
though confiderable, has not been fo great as in that of the fine.

In 1463, being the 3d of Edward IVth, it was enabled, that
** no fervant in hufbandry, nor common labourer, nor fervant
** to any artificer inhabiting out of a city or burgh, Ihall ufe
" or wear in their cloathing any cloth above two fhillings the
** broad yard." In the 3d of Edward the IVth, two fhillings
contained very nearly the fame quantity of filver as four of our
prefent money. But the Yorkfliire cloth which is now fold at
four {hillings the yard, is probably much fuperior to any that
was then made for the wearing of the very pooreft order of com-
mon fervants. Even the money price of their cloathing, therefore,
may, in proportion to the quality, be fomewhat cheaper in the
prefent than it was in thofe antient times. The real price is certainly
a good deal cheaper. Ten pence was then reckoned what is-
called the moderate and reafonable price of a bufliel of wheat..
Two fliillings, therefore, was the price of two bufliels and near
two pecks of wheat, which in the prefent times, at three fliillings .
and fixpence the bufliel, would be worth eight fliillings and 5

nine--

jro THE NATURE AND CAUSES OF

■BOOK nine-pence. For a yard of this cloth the poor fervant muft have
^'^ j parted with the power of purchafmg a quantity of fubfiftence
equal to what eight fliillings and nine-pence would purchafe in
the prefent times. This is a fumptuary law too, reftraining
the luxury and extravagance of the poor. Their cloathing, there-
ibre, had commonly been much more expenfive.

The fame order of people are, by the fame law, prohibited
from wearing hofe, of which the price fliould exceed fourteen-
pence the pair, equal to about eight and twenty pence of our
prefent money. But fourteen-pence was in thofe times the piice
of a bufliel and near two pecks of wheat ; which in the prefent
times, at three and fixpence the bufliel, would coft five fhillings
and three- pence. We fhould in the prtfent times confider this
as a very high price for a pair of flockings tcTa fervant of the
poorefl and loweft order. He muft, however, in thofe times
have paid what was really equivalent to this price for them.

In the time of Edward IVth, the art of knitting flockings
^vas probably not known in any part of Europe. Their hofe
•were made of common cloth, which may have been one of the
caufes of their dearnefs. The fiiil perfon that wore flockings
in England is faid to have been Queen Elizabeth. She received
them as a prefent from the Spanifh ambaffador.

Both in the coarfe and in the fine woollen manufaflure, the
machinery employed was much more imperfect in thofe antient,
than it is in the prefent times. It has fince received three very
capital improvements, befides, probably, many fmaller ones of
which it may be difficult to afcertain either the number or the
importance. The three capital improvements are ; firfl. The
exchange cf the rock and fpindle for the fpinning wheel, which,

with

THE WEALTH OF NATIONS

^Ith the fame quantity of labour, will perform more than double C
the quantity of work. Secondly, the ufe of fev^ral very ingenious
machines which facilitate and abridge in a ftill greater pr portion
the winding of the worfted and woollen yarn, or the projjer
arrangement of the warp and woof before they are put into the
loom i an operation which, previous to the invention of thofe
machines, muft have been extreamly tedious and troublefome.
Thirdly, The employment of the fulling-mill for thickei j'ig the
cloth, inftead of treading it in v/ater. Neither wind nor water
mills of any kind were known in England fo early as the begin-
ning of the fixteenth century, nor, fo far as I know, in any
other part of Europe north of the Alps. They had been intro--
duced into Italy fome time before.

The confideration of thefe circumftances may, perhaps, in
fome meafure explain to us why the real price both of the coarfe
and of the fine manufaflure, was fo much higher in thofe antient,
than it is in the prefent times. It coft a greater quantity of labour
to bring the goods to market. When they were brought thither,
therefore, they muft have purchafed or exchanged for the price
of a greater quantity. .

The coarfe manufa6lure probably was, in thofe antient times,
carried on in England, in the fame manner as it always has
been in countries where arts and manufa6lures are in their
infancy. It was probably a houfhold manufadlure, in which;
every different part of the work was occafionally performed by ■
all the different members of almoft every private family ; but fb
as to be their work only when they had nothing elfe to do, and .
not to be the principal bufinefs from which any of them derived •
the greater part of their fubfiftence. The work which is per-
formed in this manner, it has already been obferved, comes always
4 much ■

THE NATURE AND CAUSES OF

K much cheaper to market than that which is the principal or fole
*j fund of the workman's fubfiftence. The fine manufa6lure,
on the other hand, was not in thofe times carried on in England,
.but in the rich and commercial country of Flanders j and it was
probably condu6led then, in the fame manner as now, by people
who derived the whole, or the principal part of their fubfiftence
from it. It was befides a foreign manufaflure, and muft have
paid fome duty, the antient cuftom of tunnage and poundage at
leaft, to the king. This duty, indeed, would not probably be
very great. It was not then the policy of Europe to reftrain, by
high duties, the importation of foreign manufa6tures, but rather
to encourage it, in order that merchants might be enabled to
fupply, at as eafy a rate as poflible, the great men with the con-
veniencies and luxuries which they wanted, and which the induHry
of their own country could not afford them,

Thr confideration of thefe circumftances may, perhaps, in
fome meafure explain to us why, in thofe antient times, the real
price of the coarfe manufacture was, in proportion to that of
the fine, fo much lower than in the prefent times.

♦

Conclusion of the Chapter.

J SHALL conclude this very long chapter with obferving
that every improvement in the circumftances of the fociety
^ends either direflly or indire6lly to raife the real rent of land,
to increafe the real wealth of the landlord, his power of pur-
chafmg the labour, or the producp of the labour of other people.

The extenfioH of improvement and cultivation tends to raife
it diredlly. The landlord's fhare of the produce neceflarily in^
^creafes with the increafe of the produce.

That

THE WEALTH OF NATIONS.

That nfe in the real price of thofe parts of the rude pro- ^^j^-^'
duce of land, which is firft the efFe<5t of extended improvement v-— v— ^
and cultivation, and afterwards the caufe of their being ftill
further extended, the rife in the price of cattle, for example*
tends too to raife the rent of land dire6lly, and in a ftill greater
proportion. The real value of the landlord's fliare, his real com*
mand of the labour of other people, not only rifes with the real
value of the produce^ but the proportion of his (hare to the whole
produce rifes with it. That produce, after the rife in its real price,
requires no more labour to colle6t it than before. A fmaller pro-
portion of- it will, therefore, be fufficient to replace, with the
ordinary profit, the ftock which employs that labour. A greater
proportion of it muft, confequently, belong to the landlord.

All thofe improvements in the produ6live powers of labour,
which tend dire6lly to reduce the real price of manufaftures, tend
indire6lly to raife the real rent of land. The landlord exchanges
that part of his rude produce, which is over and above his own
confumption, or what comes to the fame thing, the price of that
part of it, for manufa6lured produce. Whatever reduces the real
price of the latter, raifes that of the former. An equal quantity of
the former becomes thereby equivalent to a greater quantity of the
latter ; and the landlord is enabled to purchafe a greater quantity
of the conveniencies, ornaments, or luxuries, which he has
occafion for.

Every increafe in the real wealth of the fociety, every increafe
in the quantity of ufeful labour employed within it, tends indiredly
to raife the real rent of land. A certain proportion of this labour
naturally goes to the land. A greater number of men and cattle
are employed in its cultivation, the produce increafes with the
increafe of the ftock which is thus employed in raifing it, and the
rent increafes with the produce.

Vol. I, S f The

514 THE NATURE AND CAUSES OF

B O^O K The contrary circumftances, the negle6l of cultivation and itn-
i^^/— «j provement, the fall in the real price of any part of the rude produce
of land, the rife in the real price of manufadtures from the decay
of manufafluring art and induftry, the declenfion of the real wealth
of the fociety, all tend, on the other hand, to lower the real rent of
land, to reduce the real wealth of the landlord, to diminifli his
power of purchafing either the labour, or the produce of the labouj;
of other people.

The whole annual produce of the land and labour of every
country, or what comes to the fame thing, the whole price of that
annual produce, naturally divides itfelf, it has already been obferved,
into three parts ; the rent of land, the wages of labour, and the
profits of flock ; and conftitutes a revenue to three different orders
of people ; to thofe who live by rent, to thofe who live by wages,,
and to thofe who live by profit. Thefe are the three great original
and conftituent orders of every civilized fociety, from whofe revenue
that of every other order is ultimately derived.

The intereft of the firft of thofe three great orders, it appears,
from what has been juft now faid, is ftriftly and infeparably con-
ne6led with the general interefl of the fociety. Whatever either pro-
motes or obftru6ls the one, neceffarily promotes orobflru6ls the other.
When the publick deliberates concerning any regulation of commerce
or police, the proprietors of land never can miflead it, with a view to
promote the intereft of their own particular order; at leaft, if they have
any tolerable knowledge of that intereft. They are, indeed, too often.
defe6live in this tolerable knowledge. They are the only one of the three
orders whofe revenue cofts them neither labour nor care, but comes
to them, as it were, of its own accord, and independent of any plan
or projeSl of their own. That indolence which is the naturaj.
elFeft of the eafe and fecurity of their fituation, renders them too-
y oftenjfc

THE WEALTH OF NATIONS.

3^5

often, not only ignorant, but incapable of that application of mind
which is neceffary in order to forefee and underftand the confe-
quences of any publick regulation.

The intereft of the fecond order, that of thofe who live by
wages, is as ftridly conne6led with the intereft of the fociety as that
of the firft. The wages of the labourer, it has already been fliewn,
are never fo high as when the demand for labour is continually
riling, or when the quantity employed is every year increafmg
confiderably. When this real wealth of the fociety becomes
ftationary, his wages are foon reduced to what is barely enough to
enable him to bring up a family, or to continue the race of
labourers. When the fociety declines, they fall even below this. The
order of proprietors may, perhaps, gain more by the profperity
of the fociety, than that of labourers: but there is no order that
fuffers fo cruelly from its decline. But though the intereft of the
labourer is ftri6:ly connected with that of the fociety, he is incapa-
ble either of comprehending that intereft, or of underftanding its
conne61:ion with his own. His condition leaves him no time to
receive the neceffary information, and his education and habits are
commonly fuch as to render him unfit to judge even though he
was fully informed. In the publick deliberations, therefore, his
voice is little heard and lefs regarded, except upon fome particular
occafions, when his clamour is animated, fet on, and fup-
ported by his employers, not for his, but their own particular
purpofes.

His employers conftltute the third order, that of thofe who live
by profit. It is the ftock that is employed for the fake of profit,
which puts into motion the greater part of the ufeful labour of
every fociety. The plans and projefts of the employers of ftock
regulate and direct all the moft important operations of labour, and

S f 2 profit

THE NATURE AND CAUSES OF

B O^O K profit is the eiid propofed by all thofe plans and proje£ls. But the
W'^v^**^ rate of profit does not, like rent and wages, rife with the profperity,
and fall with the declenfion of the fociety. On the contrary, it is.
natui"ally low in rich, and high in poor countries, and it is always
higheft in the countries which are going fafleft to ruin. The intereft:
of this third order, therefore, has not the fame conne6^:ion with the
general intereft of the fociety as that of the other two. Merchants
and mafler nianufa<5luiers are^ in this order, the two clafies of
people who commonly employ the largeft capitals, and who by
their wealth draw to themfelves the greateft fhare of the publick
eonfideration. As during their whole lives they are engaged in:
plans and proje6ls, they have frequently more acutenefs of under-
ftanding than the greater part of country gentlemen. As theli^
thoughts, however, are commonly exercifed rather about the intereft
of their own particular branch of bufmefs, than about that of the
fociety, their judgement, even when given with the greateft candour,,
(which it has not been upon every occafion), is much, more to be
depended upon with regard to the former of thofe two obje6ls, than:
with regard to the lattei'. Their fuperiority ov er the country gentle-
man is, not fo much in their knowledge of the publick intei'eft, as.
in their having a better knowledge of tlieir own intereft than he has of
his. It is by this fuperior knowledge of their own intereft that they
have frequently impofed upon his generofoy, and peifuaded him to.
give up both his own intereft and that of the publick, from a very-
fmiple but honeft conviction,, that their intereft, and not his, was the
intereft of the publick. The intereft of the dealers, however, in any.'
particular branch of trade or manufadtures, is always in fome
refpecls different from, and even oppofite to that of the publick..
To widen the market and to narrow the competition, is always the-
♦ intereft of the dea'ers. To widen the market may frequently be-

agreeable enough to the intereft of the publick ; but to narrow the
con^petition muft always be againft it, and can ferve only to enable

the

THE WEALTH OF NATIONS.

317

the dealers, by ralfing their profits above what they naturally would CHAP,
be, to levy, for their own benefit, an abfuid tax upon the reft of
their fellow citizens. The propofal of any new law or regulation
of commerce which comes from this order, ought always to be
liftened to with great precaution, and ought never to be adopted till
after having been long and carefully examined, not only with the
moft fcrupulous, but with the mofl fufpicious attention. It comes
from an order of men, whofe intereft is never exa6lly the fame
with that of the publick, who have generally an intereft to deceive"
and even to opprefs the publick, and who accordingly have, uport
many occafions, both deceived and opprefTed it.

Years
XU.

1202

1205

1223
1237

^243
1244

1246

1247

1257
1258

1270
1286

Price of the Quarter of
VV heat each Year.

4
6

12
12

15
12

3
2

13
4

15
16

= 1

-! 1

Average of the dif-
ferent Prices of the
fame Year.

— 17 —
5 12 —

— 9 4

Total,
Average Price,

The average Price of
each Year in Money
of the prefent Times.-

£■

2
2

16
10

6
6
8

12
II

16 —
8 —

3i8

THE NATURE AND CAUSES OF

Years
XIJ.

Price of the Quarter of
Wheat eacliYi

ear.

1287

1288

1289

1290
1294
1 302
13.09

1316

13^7

J338

I
I

Average of the dif-
ferent Prices of the
fame Year.

The average Price of
each Year in Money
of the prefent Times.

— 16

I
I
I
I

2
2

10
1 2

6
2

— 1

4 —
7 2

— 3 — 4-

4 —
14 —

13 —

8
4

— 10

1 1

Total, 23
Average Price, i

8 —

12 —

I 6

6 —
10 —

1 1.

■8 8

THE WEALTH OF NATIONS.

Years
Xll.

1339
1349
i3'J9
1361

1363

1369

^379
1387

1390

1401
1407
1416

Price of the Qiiarter of
Wheat eacli Vear.

9
2

4
2

13
14

3
16

= ]

4^
4

Average of the dif-
ferent Prices of the
fame Year.

£. s. d.

I 2

14 5

3 10

T\\i average Price of CHAP,
each Year in Money XL
of the prefent Times. Vi^ »J

Total,
Average Price,

-5
J

1 1

94-

1423

1425
1434

4
6

8
13

1435

1439

1 1

I 3

1440

1444

\ -

4
4

^ \

1445
1447

9
16

1448

1449

Total,

Average Price,.

3.f

THE NATURE AND CAUSES OF

Years
XII.

Price of the Quarter of
Wheat eachYear.

Average of
ferent Prices
fame Year.

the tlif-
or the

The average Price of
each Year in Money
of the prefent Times.

J".

-f-

J-.

'453

-*4j J

I AC7

T A rn

^43y

1460

1463

r ,

\ -

1 1

— I

—

1464

i486

149 I

1494

1497

1 1

Total,

Average Price,

1499

1504

1521

1551

1553

J554

1555

1556

1 -

1557

Jf3

1558

^559

1560

Total,
Average Price,

6
8

10
2
8
8
8

8
8
8

THE WEALTH OF NATIONS.

321

Years
XII.

Price of the Quarter of
Wheat eacnVear.

Average of the dif-
ferent Prices of the
fame Year.

Tlie average Price of
each Year in Money
of the prefent Times.

1 r'f\ T
1501

I-

1502

—

— —

—

\ ^

I I

— 5

T rQ-f

—

-—

—

^594

T A

1 0

T A

I 0

1595

—

^596

^597

t 4

= \

4 12

1598

1599

1600

1601

Total,

CHAP.
XI.

Average Price,

Vol. I.

322

BOOK
I.

THE NATURE AND CAUSES OF

Prices of the Quarter of nine BufheJs of the bejl or higheji priced
Wheat at Windjor Market, on Lady -day and Michaelmas y from.
1595 to 1764, both inclufve; the Price of each Tear being the
medium between the higheji Prices of thofe H'wo Market Days*

Years,

595
596

597
598

599
600

601
602
603
604
60
606
607
608
609
610
611
612
617
614
615
616
617
j6i8
619
,620

200

280
396

2 16 8

I 19 2

I 17 8
I 14 10
I 9 4

I 15 4

I 10 8

I J5 10
113 o

1 16 8

2 16 8
210 o
I 15 10
I 18 8
2
2
2
I
2
2
2

i 15 4

I 10 4

2 4
8 8

18
o
8
6

8^
8

26)54 o 61,

Years.

1621,
1622,
1623,
] 624,
1625,
1626,
1627,
1628,
1629,
1630,
1631,
1632,

1633'
1634,

1635*
1636,

s. d.

1 10

2 i«

2 12
2 8

2 12
2 9
I
I
2

8
2

— — ■ 2 15

— — 2 13

— — 2 m

— — 2 16

8
o
o
o

16 o

o
o

8
o

4
o

16)40 o o

210 o

2 I

THE WEALTH OF NATIONS.

323

Wheat per quarter.

Years.

1638,
1639,
1640,
1641,

1642, "

1643, ^
1644,

i645r
1646,

1647,

1648,

1649,

1650,

1651,

1652,

1653,
1654,

1655,
1656,

1658,

1660,
166 1,
1662,
1663,
1664,
1665,
1666,
1667,
1668,
1669,
1670,

Wheat per quarter.

Years.

Brought

over,

i 0

io7i>

1672,

1073,

0
0

1074,

0
0

Wanting

in the O

i"75»

account. The
year 1646 fup-
plied by bifhop

r\
\J

r\
yj

0
0

1 676,

1077,

1 0
2

0
0

Fleetwood.

I OJOf

1679,

Q
0

J UO<J>

I 0 0 1 ,

/■
0

—

■4

J Oo2>

— —

1 0

1 uo 3,

I 004,

T r

1 OOUj

1 007,

1 u 0 0 J

T 6Rn

1690,

—

169I,

I UOZ>

1693,

■

1694,

1695,

. l6y6.

1697,

1698,

1699,

16
0

0
0

1700,

6o)'i53

CHAP.
XI.

Carryover, 79 14 10

2 II

04-

Tt %

THE NATURE AND CAUSES OF

Wlieat per quirter.

Years.

7 ''Pi r

T
1

T T

1 702.

1 0

I TOO.

I 7o8.

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1 7 I O

J. / 1 I ,

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T 7 I 6 .

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1

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f
X

T r

1/20,

T T "7 T

T T
17

1/22,

1 u

T 7"? "7

1 /I

1724,

IT? e

1726,

—

1727,

1728,

T /I

1729,

1730,

1732,

i733»

Carry over.

Wheat per quarter.

Years.

Brought over,

Q
0

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I 0

f J J'

1736,

I 0

1738,

/z
0

■r
I

T 8

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____

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^^^^

I 2

A
U

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0

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-J

1758,

1759'

1760,

1761,

1762,

1763,

1764,

64)129

2 o 644.

THE WEALTH

OF NATIONS.

Wheat per quarter.

Wheat per quarter. CHAP.

XI.

Years.

Years,

I- -f-

/J '

— 2 6

/ o '

— I

1742,

— 114

J733»

— I

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34-

I 13

94^

( 327 )

BOOK IL

Of the Nature, Accumulation, and Employment

of Stock.

INTRODUCTION.

IN that rude ftate of fociety in which there is no divifion of
labour, in which exchanges are feldom made, and in which
every man provides every thing for himfelf, it is not necefTary that
any ftock fhould be accumulated or ftored up beforehand in order
to carry on the bufinefs of the fociety. Every man endeavours to
fupply by his own induftry his own occalional wants as they occur.
When he is hungry, he goes to the foreft to hunt : when his coat
is worn out, he cloaths himfelf with the (kin of the firft large
animal he kills : and when his hut begins to go to ruin, he
repairs it, as well as he can, with the trees and the turf that are
neareft it.

But when the divifion of labour has once been thoroughly in-
troduced, the produce of a man's own labour can fupply but a
very fmall part of his occafional wants. The far greater part
of them are fupplied by the produce of other mens labour, which
he purchafes with the produce, or, Vv^hat is the fame thing, with
the price of the produce of his own. But this purchafe cannot be
made till fuch time as the produce of his own labour has not only
been compleated, but fold. A Ilock of goods of different kinds,

therefore.

328 THE NATURE AND CAUSES OF

BOOK therefore, muft be ftored up fomewhere fufficient to maintain him,

II •
Wv-*^ and to fupply him with the materials and tools of his work till

fuch time, at leaft, as both thefe events can be brought about.

A weaver cannot apply himfelf entirely to his peculiar bufmefs,

unlefs there is beforehand ftored up fomewhere, either in his own

poffeffion or in that of fome other perfon, a ftock fufficient to

maintain him, and to fupply him with the materials and tools of

his work, till he has not only compleated, but fold his web.

This accumulation muft, evidently, be previous to his applying his.

induftry for fo long a time to fuch a peculiar bufmels.

As the accumulation of ftock muft, in the nature of things, be
previous to the divifion of labour, fo labour can be more and more
fubdivided only in proportion as ftock is previoufly more and more
✓ accumulated. The quantity of materials which the fame number

of people can work up, increafes in a great proportion as labour
comes to be more and more fubdivided j and as the operations of
each workman are gradually reduced to a greater degree of fimpli-
city, a variety of new machines come to be invented for facilitating
and abridging thofe operations. As the divifion of labour advances-,
therefore, in order to give conftant employment to an equal num-
ber of workmen, an equal ftock of provifions, and a 'greater ftock
of materials and tools than what would have been neceifary in a
ruder ftate of things, muft be accumulated beforehand. But the
number of workmen in every branch of bufineft generally increafes
with the divifion of labour in that branch, or rather it is the
increafe of their number which enables them to clafs and fubdivide
themfelves in this manner.

As the accumulation of ftock is previoufly neeeftaiy for carrying-
on this great improvement in the produclive powers of labour,
fo that accumulation naturally leads to this improvement. The
7 perfon

THE WEALTH OF NATIONS. 32^

.perfon who employs his flock in maintaining labour, necefTarily Tntiodudion.
wiflies to employ it in fuch a manner as to produce as great a
quantity of work as poffible. He endeavours, therefore, both to
make among his workmen the moft proper diftribution of employ-
ment, and to furnifli them with the beft machines which he can
either invent or afford to purthafe. His abilities in both thefe
refpe6ts are generally in proportion to the extent of his flock, or
to the number of people whom it can employ. The quantity of
induflry, therefore, not only increafes in every country with the
increafe of the flock which employs it, but, in confequence of
that increafe, the fame quantity of induflry produces a much greater
quantity of work.

Such are in general the efFe6ls of the increafe of flock upon
induflry and its produdive powers. ,

In the following book I have endeavoured to explain the nature
of flock, the effefts of its accumulation into capitals of different
kinds, and the effe6ls of the different employments of thofe capi-
tals. This book is divided into five chapters. In the firfl chapter,
I have endeavoured to fhow what are the different parts or branches
into which the flock, either of an individual, or of a great fociety,
naturally divides itfelf. In the fecond, I have endeavoured to
explain the nature and operation of money confidered as a particu-
lar branch of the general flock of the fociety. The flock which
is accumulated into a capital, may either be employed by the perfon
to whom it belongs, or it may be lent to fome other perfon. In
the third and fourth chapters, I have endeavoured to examine the
manner in which it operates in both thefe fituations. The fifth
and lafl chapter treats of the diii'erent effe6ls which the different
-employments of capital immediately produce upon the quantity
both of national induflry, and of the annual produce of land and
labour.

"Vol. L

U u

33^

THE NATURE AND CAUSES OF

CHAP. I.

Of the Divifwn of Stock.

BO^OK T'TTHEN the ftock which a man poflefFes is no more than
V V fufficient to maintain him for a few days or a few weeks,
he feldom thinks of deriving any revenue from it. He confiimes it
as fparingly as he can, and endeavours by his labour to acquire
fomething which may fupply its place before it be confumed alto-
gether. His revenue is, in this cafe, derived from his labour
only. This is the ftate of the greater part of the labouring poor
in all countries.

But when he poflefles ftock fufficient to maintain him for
months or years, he naturally endeavours to derive a revenue from
the greater part of it ^ referving only fo much for his immediate
confumption as may maintain him till tliis revenue begins to come
-in. His whole ftock, therefore, is diftinguiflied into two parts.
That part which, he expe6ls, is to afford him this revenue is called
his capital. The other is that which fupplies his immediate con-
fumption ; and which confifts either, firft, in that portion of his
whole ftock which was originally referved for this purpofe j or,
fecondly, in his revenue, from whatever fource derived^ as it gra-
dually comes in ; or, thirdly, in fuch things as had been purchafed
by either of thefe in former years, and which are not yet entirely
confumed; fuch as a ftock of cloaths, houdrold furniture, and the
like. In one, or other, or all of thefe three articles, confifts the
ftock which men commonly refcrve for their own immediate con-
fumption.
7

There

THE WEALTH OF NATIONS.

331

There are two different ways in which a capital may be em- CH^AP.
ployed fo as to yield a revenue or profit to its employer. v.^ — v — •*

- First, it may be employed in raifmg, manufa6lm*ing, or pur-
diafmg goods, and felling them again with a profit. The capital
employed in this manner yields no revenue or profit to its employer,
while it either remains in his pofTeffion or continues in the fame
fhape. The goods of the merchant yield him no revenue or profit
till he fells them for money, and the money yields him as little till
it is again exchanged for goods. His capital is continually going
from him in one fliape, and returning to him in another, and it is
only by means of fuch circulation or fuccefTive exchanges that it
.can yield him any profit. Such capitals, therefore, may very
properly be called circulating capitals.

Secondly, it may, be employed in the improvement of land,
in the purchafe of ufeful machines and inftruments of trade, or
in fuch-like things as yield a revenue or profit without changing
mailers or circulating any further. Such capitals, therefore, may
very properly be called fixed capitals.

Different occupations require very different proportions be-
tween the fixed and circulating capitals employed in them.

The capital of a merchant, for example, is altogether a circu-
lating capital. He has occafion for no machines or inflruments
of trade, unlefs his fliop or warehoufe be confidered as fuch.

Some part of the capital of every mafVer artificer or manufac-
turer muft be fixed in the inflruments of his trade. This part,
however, is very fmall in fome, and very great in others. A mailer

U u 2 , taylor

532 THE NATURE AND CAUSES OF

BOOK taylor requires no other inftruments of trade but a parcel of needles^
w-v^ Thofe of the mafter fhoemaker are a little,, though but a very-
little, more expenfive. Thofe of the weaver rife a good deal above
thofe of the ^hoemaker. The far greater part of the capital o£
all fuch mafter artificers, however, is circulated either in the wages,
of their workmen, or in the price of their materials, and repaid with
a profit by the price of the work.,

In other works a much greater fixed capital is required. In a
great iron- work, for example, the furnace for melting the ore,
the forge, the flitt-mill, are inftruments of trade which cannot be
ere6led without a very great expence. In coal-works and mines
of every kind, the machinery necelTary both for drawing out the
water and for other purpofes, is frequently ftill more expenfive.

That part of the capital of the farmer which is employed in
the inftruments of agriculture is a fixed ; that which is employed
in the wages and maintenance of his labouring fervants, is a circu-
lating capital. He makes a profit of the one by keeping it in his
own pofieffion, and of the other by parting with it. The price or
value of his labouring cattle is a fixed capital in the fame manner
as that of the inftruments of hulbandry : Their maintenance is a
circulating capital in the fam.e manner as that of the labouring
fervants. The farmer makes his profit by keeping the labouring
cattle, and by parting with their maintenance. Both the price and
the m.aintenance of the cattle which are bought in and fattened,
not for labour, but for fale, are a circulating capital. The farmer
makes his profit by parting with them. A flock of fheep or a herd;-
of cattle that,- in a breeding country, is bought in, neither for
labour nor for fale, but in order to make a profit by their wool,
by their milk, and by their increafe, is a fixed capital. The profit
is made by keeping them* Their maintenance is a circulating

capital.

THE WEALTH OF NATIONS.

333

capital. The profit is made by parting with it and it comes
back with both its own profit, and the profit upon the whole price
of the cattle, in the price of the wool, the milk, and the increafe.
The whole value of the feed too is properly a fixed capital, Tho'
it goes backwards and forwards between the ground and the granary^
it never changes mafters, and therefore does not properly circulate.
The farmer makes his profit, not by its fale, but by its increafe.

The general ftock of any country or fociety is the fame with
that of all its inhabitants or members, and therefore naturally
divides itfelf into the fame three portions, each of which has a dif-
tin6l function or office.

The Firfl, is that portion which is referved for immediate con-
fumption, and of which the charafleriftick is, that it affords no
revenue or profit. It confiRs in the ftock of food, cloaths, houf-
hold furniture, &c. which have been purchafed by their proper
confumers, but which are not yet entirely confumed. The whole
ftock of mere dwelling houfes too fubfifting at any one time in the
country, make a part of this firft portion. The ftock that is laid
out in a houfe, if it is to be the dwelling houfe of the proprietor,-
ceafes from that moment to ferv^e in the fundion of a capital, or to
afford any revenue to its owner. A dwelling houfe,- as fuch, con-
tributes nothing to the revenue of its inhabitant ; and though it
is, no doubt, extremely ufeful to him, it is as his cloaths and
houfhold furniture are ufeful to him, which, however, make a
part of his expence, and not of his revenue. If it is to be lett to
a tenant for rent, as the houfe itfelf can produce nothing, the
tenant muft always pay the rent out of fome other revenue which
he derives eitlier from labour, or ftock, or land. Though a houfe,
therefore, may yield a revenue to its proprietor, and thereby ferve-
ia Xhp fun(5^ion of a capital to him, it cannot yield any to the-

publick,.

334

THE NATURE AND CAUSES OF

^ P^*^^'^^^' ^^^^"^ funftion of a capital to it, and the revenue

c — ^ of the whole body of the people can never be in the ImaUeft degree
increafed by it. . Cloaths, and houQiold furniture, in the fame
manner, fometimes yield a revenue, and thereby ferve in the func-
tion of a capital to particular perfons. In countries where maf-
querades are common, it is a trade to lett out mafquerade dreffes
for a night. Upholfterers frequently lett furniture by the month
or by the year. Undertakers lett the furniture of funerals by the
day and by the week. Many people lett furniflied houfes, and get
a rent, not only for the ufe of the houfe, but for tliat of the fur-
niture. The revenue, however, which is derived from fuch things,
muft always be ultimately drav^rn from fome other fource of reve-
nue. Of all parts of the ftock, either of an individual, or of a
fociety, referved for immediate confumptisjn, what is laid out in
houfes is moft flowly coafumed. A flock of cloaths may lafl
feveral years : a flock of furniture half a centuiy or a century :
but a ftock of houfes, well built and" properly taken care of, may
laft many centuries. Thoui^h the period of their total confump-
tion, however, is more diflant, they are ftill as really a ftock re-
ferved for immediate confumption as either cloaths, or houftiold
furniture.

The Second of the three portions into which the general ftock
of the fociety divides itfelf, is the fixed capital ^ of which the cha-
rafteriftick is, that it affords a revenue or profit without circulating
or changing mafters. It confifts chiefly of the four following
articles :

First, of all ufeful machines and inftruments of trade which
facilitate and abridge labour :

Secondly, of all thofe profitable buildings whxh are the
means of procuring a revenue, not only to their proprietor who

letts

THE WEALTH OF NATIONS.

335

letts them for a rent, but to the perfoii who pofTefres them and C H^A P.
pays that rent for them ; fuch as fliops, warehoufes, workhoufes, v- ^
farmhoufes, with all their neceflary buildings, ftables, granaries,
&c. Thefe are very different from mere dwelling houfes. Th|y
are a fort of inftruments of trade, and may be confidered in the
fame light :

Thirdly, of the improvements of land, of what has been
profitably laid out in clearing, draining, enclofmg, manuring, and
reducing it into the condition moft proper for tillage and culture.
An improved farm may very juftly be regarded in the fame light
as thofe ufeful machines which facilitate and abridge labour, and
by means of which, an equal circulating capital can afford a mucli
greater revenue to its employer. An improved farm is equally
advantngeous and more durable than any of thofe machines, fre-
quently requiring no other repairs than the moft profitable applica-
tion of the farmer's capital employed in cultivating it :

Fourthly, of the acquired and ufeful abilities of all the inha-
bitants or members of the fociety. The acquifition of fuch talents,,
by the maintenance of the acquirer during his education, fludy, or
apprenticeihip, always cofts a real expence, which is a capital
fixed and realized, as it were, in his perfon. Thofe talents, as
they make n part of his foj tune, Co do they likewife of that of the
fociety to which he belongs. The improved dexterity of a work-
man may be confidered in the fame light as a machine or inflru-
ment of trade which facilitates and abridges labour, and which>
though it colls a certain expence, repays that expence with a
profit.

The Third and lad of the three portions into which the general
ftock of the fociety naturally divides itfelf, is the -circulating capital.^;

THE NATURE AND CAUSES OF

K of which the chara6leriftick is', that it: affords a revenue only by
-> circulating or changing mafters. It, is CQinpofed Ukewife of four
parts :

First, of the money by means of which all the other three are
circulated and diftributed to their proper ufers and confumers :

Secondly, of the ftock of provifions which are in the pof-
feffion of the butcher, the grazier, the farmer, the corn-merchant,
the brewer, &c. and from the fale of which they expert to derive
a profit:

Thirdly, of the materials, vi^hether altogether rude, or more
or lefs raanufaflui ed, of cloaths, furniture, and building, which
are not . yet made up into any of thofe three fliapes, but which
remain in the hands of the growers, the manufa6turers, the mercers
and drapers, the timber-merchants, the carpenters and joiners, the
brickmakers, &c.

Fourthly, and laflly, of the work which, is made up and
compleated, but which is iiill in the hands of the merchant or
manufa61:urer, and not yet difpofed of or diftributed to the proper
ufers and confumers ; fuch as the finidied work which we fre^.
. quently find ready made in the fhops of the fmith, the cabinet-
maker, the goldfrnith, the jeweller, the china-merchant, &c. The
circulating capital confifls, in this manner, of the provifions, ma-
terials, and finlfhed work of all kinds that are in the hands of their -
refpeclive dealers, and of the money that is neceffary for circulating
and diflributing them to thofe who are finally to ufe or to confume
them. .

THE WEALTH OF NATIONS.

337

Of thefe four parts three, provifions, materials, and finiflied C H^A P.
work, are, either annually, or in a longer or fliorter period, regu- v---'
larly withdrawn from it, and placed either in the fixed capital or
in the (lock referved for immediate confumption.

Every fixed capital is both originally derived from, and requires
to be continually fupported by a circulating capital. All ufeful
machines and inftruments of trade are originally derived from a
circulating capital, which furnifhes the materials of which they are
made, and the maintenance of the workmen' who make them.
They require too a capital of the fame kind to keep them in con-
ftant repair.

No fixed capital can yield any revenue but by means of a circu-
lating capital. The moft ufeful machines and inftruments of trade
will produce nothing without the circulating capital which affords
the materials they are employed upon,. and the maintenance of the
workmen who employ them. Land, however improved, will
yield no revenue without a circulating capital, which maintains the
labourers who cultivate and collet its produce.

To maintain and augment the {lock which may be referved for
immediate confumption, is the fole end and purpofe both of the
fixed and circulating capitals. It is this flock which feeds, cloaths,
and lodges the people. Their riches or poverty depends upon the
abundant or fparing fupplies which thofe two capitals can afford to
the flock referved for immediate confumption.

So great a part of the circulating capitallDeing continually with-
drawn from it in order to be placed in the other two branches of
the general flock of the fociety, it mufl in its turn require continual

Vol, I. X X fupplies,

33^

THE NATURE AND CAUSES OF

B O^O K fupplies, without which it would foon ceafe to exift. Thefe fup-
plies are principally drawn from three fources, the produce of land,
of mines, and of fiflieries. Thefe afford continual fupplies of pro-
vifions and materials, of which part is afterwards wrought up into
finiflied work, and by which are replaced the provif^ons, mate-
rials, and finifhed work continually withdrawn from the circulating
capital. From mines too is drawn what is necelTary for maintain-
ing and augmenting that part of it which confifts in money. For
though, in the ordinary courfe of bufmefs, this part is not, like
the other three, neceffarily withdrawn from it, in order to be placed
in the otlier two branches of the general ftock of the fociety, it
muft, however, like all other things, be wafted and worn out at
laft, and fometimes too be either loft or fent abroad, and muft,
therefore, require continual, though, no doubt, much fmaller
fupplies.

Land, mines, and fiftieries, require all both a fixed and a cir-
culating capital to cultivate them ; and their produce replaces with
a profit, not only thofe capitals, but all the others in the fociety.
Thus the farmer annually replaces to the manufa6lurer the provi-
fions which he had confumed and the materials which he had
wrought up the year before ; and the manufacturer replaces to the
farmer the finiflied work which he had wafted and worn out in the
fame time.. This is the real exchange that is annually made between
thofe two orders of people, though it feldom happens that the rude
produce of the one and the manufa6lured produce of the other,
are direiSlly bartered for one another becaufe it feldom happens
that the farmer fells his corn and his cattle, his flax and his wool,
to the very fame perfon of whom he chufes to purchafe the cloaths,
furniture, and inftruments of trade which he wants. Ke fells,
therefore, his rude produce for money, with which he can purchafe,
wherever it is to be had, the manufactured produce he has occafion

for..

THE WEALTH OF NATIONS

339

for. Land even replaces, in part at leaft, the capitals with which C H^A P.
fiflieries and mines are cultivated. It is the produce of land v^-/-*^
which draws the fifh from the waters ; and it is the produce
of the furface of the earth which extracts the minerals from its
bowels.

The produce of land, mines, and filheries, when their natural
fertility is equal, is in proportion to the extent and proper appli-
cation of the capitals employed about them. When the capitals
are equal and equally well applied, it is in proportion to their
natural fertility.

In all countries where there is tolerable fecurity, every man of
common underftanding will endeavour to employ whatever ftock he
can command in procuring either prefent enjoyment or future profit.
If it is employed in procuring prefent enjoyment, it is a ftock referved
for immediate confumption. If it is employed in procuring future
profit, it muft procure this profit either by flaying with him, or by
going from him. In the one cafe it is a fixed, in the other it is a
circulating capital. A man muft be perfe6tly crazy who, where there
is tolerable fecurity, does not employ all the ftock which he com-
mands, whether it be his own or borrowed of other people, in
fome one or other of thofe three ways.

In thofe unfortunate countries, indeed, v/here men are continually
afraid of the violence of their fuperiors, they frequently bury and
conceal a great part of their ftock, in order to have it always at hand
to carry with them to fome place of fafety in cafe of their being
threatened with any of thofe difafters to which they confider them-
felves as at all times expofed. This is faid to be a common practice
in Turky, in Indoftan, and, I believe, in moft other governments

X X 2 of

540 THE NATURE AND CAUSES OF

BOOK of Afia. It feems to have been a common praftice among our ancef^
v^,yZ^ tors during the violence of the feudal government. Treafure-trove
was in thofe times confidered as no contemptible part of the revenue
of the greateft fovereigns in Europe. It confifted in fuch treafure as
was found concealed in the earth, and to which no particular perfon
could prove any right. This was regarded in thofe times as fo im-
portant an obje6V, that it was always confidered as belonging to the
fovereign, and neither to the finder nor to the proprietor of the land,
unlefs the right to it had been conveyed to the latter by an exprefs
claufe in his charter. It was put upon the fame footing with gold
and filver mines, which, without a fpecial claufe in the charter, were
never fuppofed to be comprehended in the general grant of the lands,
though mines of lead, copper, tin, and coal were, as things of
fmaller confequence.

THE WEALTH OF NATIONS,

CHAP. IL

Of Money confidered as a particular Branch of the general Stock-
of the Society y or of the Expence of maintaining the National
Capital,

IT has been (hewn in the firft book, that the price of the greater ^ j>
part of commodities refolves itfelf into three parts, of which I^-
one pays the wages of the labour, another the profits of the ftock,
and a third the rent of the land which had been employed in pro-
ducing and bringing them to market: that there are, indeed, fome
commodities of which the price is made up of two of thofe parts
only, the wages of labour, and the profits of flock : and a very
few in which it confifts altogether in one, the wages of labour :.
but that the price of every commodity neceffarily refolves itfelf inta
fome one or other or all of thefe three parts; every part of it which
goes neither to rent nor to wages, being neceffarily profit to fome-
body.

Since this is the cafe, it has been obferved, v/ith regard to every
particular commodity, taken feparately; it mufl: be fo with re-
gard to all the commodities which compofe the whole annual
produce of the land and labour of every country, taken complexly.
The whole price or exchangeable value of that annual produce,,
mufl refolve itfelf into the fame three parts, and be parcelled out
among the different inhabitants of the country, either as the
wages of their labour, the profits of their flock, or the rent of
their land.

But

THE NATURE AND CAUSES OF

BOOK But though the v/hole value of the annual produce of the land
c— -v-*- ' ^ind labour of every country, is thus divided among and conftitutes
a revenue to its different inhabitants, yet as in the rent of a pri-
vate eftate we diftinguiHi between the grofs rent and the neat rent,
fo may we likewife in the revenue of all the inhabitants of a great
country.

The grofs rent of a private eftate comprehends whatever is paid
by the farmer: the neat rent, what remains free to the landlord,
after dedutling the expence of management, of repairs, and all
other neceffary charges; or v^'hat, without hurting his eftate, he
can afford to place in his ftock referved for immediate confumption,
or to fpend upon his table, equipage, the ornaments of his houfc
and furniture, his private enjoyments and amufements. His real
wealth is in proportion, not to his grofs, but to his neat rent.

The grofs revenue of all the inhabitants of a great country,
comprehends the whole annual produce of their land and labour :
the neat revenue, what remains free to them after deducing the
expence of maintaining; firft, their fixed; and, fecondly, their
circulating capital; or what, without encroaching upon their ca-
pital, they can place in their ftock referved for immediate con-
, fumption, or fpend upon their fubfiftence, conveniencies and
amufements. Their real wealth too is in proportion, not to their
grofs, but to their neat revenue.

The whole expence of maintaining the fixed capital, muft evi-
dently be excluded from the neat revenue of the fociety. Neither
the materials necefTary for fupporting their ufeful machines and
inftruments of trade, their profitable buildings, &c. nor the pro-
dace of the labour necefTary for fafliioning thofe materials into the
proper form, can ever make any part of it. The price of
that labour may, indeed, make a part of it ; as the workmen fo

employed

THE WEALTH OF NATIONS. 34.

employed may place the whole value of their wages in their ftock C HA P.
referved for immediate confumption. But in other forts of \^ ■ y ~— >
labour, both the price and the produce go to this ftock, the price
to that of the workmen, the produce to that of other people,
whofe fubfirtence, conveniencies, and amufements, arc augmented
by the labour of thofe workmen.

The intention of the fixed capital is to increafe the productive
powers of labour, or to enable the fame number of labourers to
perform a much greater quantity of work. In a farm where all"
the neceffary buildings, fences, drains, communications, &c. are
in the moft perfect good order, the fame number of labourers and
labouring cattle will raife a much greater produce, than in one
of equal extent and equally good ground, but not furnifhed with
equal conveniencies. In manufactures the fame number of hands-
affifted with the befl machinery, will work up a much greater
quantity of goods than with more imperfect inftruments of trade.
The expence which is properly laid out upon a fixed capital of
any kind, is always repaid with great profit, and increafes the an-
nual produce by a much greater value than that of the fupport
which fuch improvements require. This fupport, however, flill
requires a certain portion of that produce. A certain quantity of
materials, and the labour of a certain number of workmen, both
of which might have been immediately employed to augment the
food, cloathing, and lodging, the fubfifl"ence and conveniencies of
the fociety, are thus diverted to another employment, highly ad-
vantageous indeed, but flill different from this one. It is upon
this account that all fuch improvements in mechanicks, as enable
the fame number of workmen to perform an equal quantity cf
work, with cheaper and fimpler machinery than had been ufual
before, are always regarded as advantageous to every fociety. A
certain quantity of materials, and the labour of a certain nurabet
7 of

344

THE NATUPvE AND CAUSES OF

B O O K of workmen, which had before been employed in fupporting a
v...*-v-^ more complex and expenfive machinery, can afterwards be ap-
pHed to augment the quantity of work which that or any other
machinery is ufeful only for performing. The undertaker of-fome
great manufa6lory who employs a thoufand a -year in the mam-
tenance of his machinery, if he can reduce this expence to five
hundred, will naturally employ the other five hundred in pur-
chafing an additional quantity of materials to be wrought up by
an additional number of workmen. The quantity of that work,
therefore, which his machinery was ufeful only for performing,
will naturally be augmented, and with it ail the advantage and
conveniency which the fociety can derive from that work.

The expence of maintaining the fixed capital in a great country,
may very properly be compared to that of repairs in a private eftate.
The expence of repairs may frequently be necefTary for fupporting
the produce of the eftate, and confequently both the grofs and the
neat rent of the landlord. When by a more proper diretYion,
however, it can bediminiflied without occafioning any diminution
of produce, the grofs rent remains at leaft the fame as before, and
the neat rent is necelTarily augmented.

But though the whole expence of maintaining the fixed capital
is thus neceflarily excluded from the neat revenue of the fociety,
it is not the fame cafe with that of maintaining the circulating ca-
pital. Of the four parts of which this latter capital is compofed,
money, provifions, materials, and finifhed work, the three lafir,
it has already been obferved, are regularly withdrawn from it, and
placed either in the fixed capital of the fociety, or in their ftock
referved for immediate confumption. Whatever portion of thofe
confumable goods is not employed in maintaining the former,
goes all to the latter, and makes a part of the neat revenue of the

fociety.

THE WEALTH OF NATIONS.

345

fociety. The maintenance of thofe three parts of the circulating C HA P.

capital, therefore, withdraws no portion of the annual produce -v-H
from the neat revenue of the fociety, befides what is neceffary for
maintaining the fixed capital.

The circulating capital of a fociety is in this refpe61; different
from that of an individual. That of an individual is totally ex-
cluded from making any part of his neat revenue, which muft con-
fifl: altogether in his profits. But though the circulating capital
of every individual, makes a- part of that of the fociety to which
he belongs, it is not upon that account totally excluded from
making a part likewife of their neat revenue. Though the whole
goods in a merchant's fhop muft by no means be placed in his
own flock referved for immediate confumption, they may in that
of ot'ier people, who from a revenue derived from other funds,
may regularly replace their value to him together with its profits,
without occafioning any diminution either of his capital or of-
their's.

Money, therefore, is the only part of the circulating capital
of a fociety of which the maintenance can occafion any diminutioa:
in their neat revenue.

The fixed capital, and that part of the circulating capital which'
confifts in money, fo far as they affect the revenue of the focletyj
bear a very great refemblance to one another.

First, 3s thofe machines and inllruments of trade. Sec. re-
quire a certain expence fiift to erect them and afterwards to Ibppoit-
them, both which expences, though they make a part of the grofs,-
are dedu6lions from the neat revenue of the fociety; fo the ftock
of money which circulates- in any country muft require a certain

Vol. I. y y expence,.

34^

THE NATURE AND CAUSES OF

B O^O K expence, firft to collefl it, and afterwards to fupport it, both which
u — expences, though they make a part of the giofs, are, in the fame
manner, deductions from the neat revenue of the fociety. A cer-
tain quantity of very valuable materials, gold and filver, and of
very curious labour, inftead of augmenting the flock referved for
immediate confumption, the fubfiftence, conveniencies, and amufe-
ments of individuals, is employed in fupporting that great but
cxpenfive inftrument of commerce, by means of which every indi-
vidual in the fociety has his fubfiftence, conveniencies, and amufe-
rnents, regularly diftributed to him in their proper proportions.

Secondly, as the machines and inftruments of trade, &c. which
compofe the fixed capital either of an individual or of a fociety,
make no part either of the grofs or of the neat revenue of either;
fo money, by means of which the whole revenue of the fociety is
regularly diftributed among all its different members, makes itfelf
no part of that revenue. The great wheel of circulation is alto-
gether different fiom the goods which are circulated by means
of it. The revenue of the fociety confifts altogether in thofe goods,
and not in the wheel which circulates them. In computing either
the grofs or the neat revenue of any fociety, we muft alv/ays, from
their whole annual circulation of money and goods, dedu6t the
whole value of the money, of which not a fingle farthing can ever
make any part of either.

It is the ambiguity of language only which can make this pro-
pofition appear either doubtful or paradoxical. When properly
explained and underftood, it is almoft felf-evident.

When we talk of any particular fum of money, we fometimes
mean nothing but the metal pieces of which it is compofed ; and
fometimes we include in our meaning fome obfcure reference to

the

THE WEALTH OF NATIONS

the goods which can be had in exchange for it, or to the power of C
purchafing which the poffeflion of it conveys. Thus when we fay, w
that the circulating money of England has been computed at
eighteen millions, we mean only to exprefs the amount of the
metal pieces, which fome writers have computed or rather have
fuppofed to circulate in that country. But when we fay that a
man is worth fifty or a hundred pounds a-year, we mean com-
monly to exprefs not only the amount of the metal pieces which
are annually paid to him, but the value of the goods which he can
annually purchafe or confume. We mean commonly to afcertain
what is or ought to be his way of living, or the quantity and
quality of the neceffaries and conveniencies of life in which he
can with propriety indulge himfelf. ^

When, by any particular fum of money, we mean not only to
exprefs the amount of the metal pieces of which it is compofed,
but to include in its fignification fome obfcure reference to the
goods which can be had in exchange for them, the wealth or re-
venue which it in this cafe denotes, is equal only to one of the two.^
values which are thus intimated fomev/hat ambiguoufly by the
fame word, and to the latter more properly than to the former,,
to the money's-worth more properly than to the money.

Thus if a guinea be the weekly penfion of a particular perfon,.
he can in the courfe of the week purchafe with it a certain quantity
of fubfiftence, conveniencies, and amufements. In proportion as-
this quantity is great or fmall, fo are his real riches, his real weekly
revenue. His weekly revenue is certainly not equal both to the-
guinea, and to what can be purchafed with it, but only to one
or other of thofe two equal values ; and to the latter more pro-
perly than to the former, to the guinea's-worth rather than'to the
guinea,

y y 2

THE NATURE AND CAUSES OF

K If the penfion of fucli -a perfon was paid to him-, not in gold,
^ hut in a weekly bill for a guinea, his revenue fu rely would not fo
properly confift in the piece of paper, as in what he could get for
it. A guinea may be confidered as a bill for a certain quantity
of necelTaries and conveniencies upon all the tradefmen in the
neighbourhood. The revenue of the perfon to whom it is paid,
does not fo properly confift in the piece of gold, as in what he can
get for it, or in what he can exchange it for. If it could be ex-
.changed for nothing, it would, like a bill upon a bankrupt, be of
no more value than the mod ufelefs piece of paper.

Though the v/eekly, or yearly revenue of all the different in-
habitants of any country, in the fame manner, may be, and in
reality frequently is paid to them in money, their real riches, how-
ever, the real weekly or yearly revenue of all of them taken to-
gether, muft always be great or fmall in proportion to the quan-
tity of confumable goods which they can all of them purchafe with
this money. The whole revenue of all of them taken together is
evidently not equal to both the money and the confumable goods j
but only to one or other of thofe tv/o values, and to the latter
more properly than to the former.

Though we frequently, therefore, exprefs a perfon's revenue
by the metal pieces which are annually paid to him, it is becaufe
the amount of thofe pieces regulates the extent of his power of
purchafmg, or the value of the goods which he can annually af-
ford to confume. We ftill confider his revenue as confifting in
this power . of purchafmg or confuming, and not in the pieces
which convey it.

But if this is fufficiently evident even with regard to an indivi-
dual, it is ftill more fo with I'egard to a fociety. The amount of

the

THE WEALTH OF NATIONS.

the metal pieces which are annually paid to an individual, is often C
precifely equal to his revenue, and is upon that account the fhoi tcft
and befl: expreffion of its value. But the amount of the metal
pieces which circulate in a fociety, can never be equal to the re-
venue of all its members. As ~the fame guinea which pays the
v/eekly penfion of one man to-day, may pay that of another to-
morrow, and that of a third the day thereafter, the amount of the
metal pieces which annually circulate in any country, mufl always
be of much lefs value than the whole money pcnfions annually paid
with them. But the power of purchaling, the goods which can
fucceffively be bought with the whole of thofe money penfions as
they are fucceiTively paid, muft always be precifely of the fam.c
value with thofe penfions; as muft likewife be the revenue of the
different perfons to whom they are paid. That revenue, there-
fore, cannot confift in thofe metal pieces, of which the amount is
■fo much inferior to its value, but in the power of purchafmg, in
.the goods which can fuccefhvely be bought with them as they cir-
culate from hand to hand.

Money, therefore, the great wheel of circulation, the great
inftrument of commerce, like all other inftruments of trade,
though it makes a part and a very valuable part of the capital,
makes no part of the revenue of the fociety to which it belongs;
tind though the metal pieces of which it is compofed, in the courle
of their annual circulation, diftribute to eveiy man the revenue
which properly belongs to him, they .make themfelves no part of
that revenue.

Thirdly, and laftly, tlie machines and inftruments of trade,
&c. which compofe the fixed capital, bear this further refemblance
to that part of the circulating capital which confift s in money;
that as every faving in the expencc of ere6ling and ftipporting thofe

machines,

THE NATURE AND CAUSES OF

BOOK machines, which does not diminifh the produ6tive powers of labour,.

^ .-J- is an improvement of the neat revenue of the fociety j lb every faving
in the expence of colle6ling and fupporting that part of the cir-
culating capital which confifls in money, is an improvement of
exactly the fame kind.

It is fufficiently obvious, and it has partly too been, explained
already, in what manner every faving in the expence of fupporting
the fixed capital is an improvement of the neat revenue of the
fociefy. The whole capital of the undertaker of every work is necef-
farily divided between his fixed and his circulating capital. While his
whole capital remains the fame, the fmaller the one part, the greater
muft necefiarily be the other. It is the circulating capital which
furnifhes the materials and wages of labour, and puts induftry into
motion. Every faving, therefore, in the expence of maintaining
the fixed capital, which does not diminifh the prcdu6live powers
of labour, muft increafe the fund which puts induftry into motion,
and confequently the annual produce of land and labour, the real
revenue of every fociety.

The fubftitution of paper in the room of gold and filver money,
replaces a very expenfive inftrument of commerce with one much
lefs coftly, and fometimes equally convenient. Circulation comes
to be carried on by a new wheel,, which it cofts lefs both to ere6t
and to maintain than the old one. But in what manner this opera-
tion is performed, and in what manner it tends to increafe
either the grofs or the neat revenue of the fociety, is not
altogether fo obvious, and may therefore req^uire fome further
explication.

There are feveral different forts of paper money ; but the circu-
lating notes of banks and bankers are the fpecies which is beft
known, and which feems beft adapted for this purpofe.

7 Wheh

THE WEALTH OF NATIONS. 35;

When the people of any particular country have fuch con- CHAP,
iidence in the fortune, probity, and prudence of a particular \..— v^— j
bajiker, as to believe that he is always ready to pay upon demand
fuch of his promifTary notes as are hkely to be at any time prefented
to him ; thofe notes come to have the fame currency as gold and
iilver money, from the confidence that fuch money can at any time
be had for them,

A PARTICULAR banker lends among his cuftomers his own
promiflaiy notes, to the extent, we fhall fuppofe, of a hundred
thoufand pounds. As thofe notes ferve all the purpofes of money,
his debtors pay him the fame intereft as if he had lent them fo much
money. This intereft is the fource of his gain. Though fome of
thofe notes are continually coming back upon him for payment,
part of them continue to circulate for months and years together.
Though he has generally in circulation, therefore, notes to the
•extent of a hundred thoufand pounds, twenty thoufand pounds in
gold and filver may, frequently, be a fufficient provifion for an~
fwering occafional demands. By this operation, therefore, twenty
thoufand pounds in gold and filver perform all the fun6lions which
a hundred thoufand could otherwife have performed. The
fame exchanges may be made, the fame quantity of confumable
goods may be circulated and diftributed to their proper confumers,
by means of his promilTary notes, to the value of a hundred thou-
fand pounds, as by an equal value of gold and filver money. Eighty
thoufand pounds of gold aad filver, therefore, can, in this manner,
be fpared from the circulation of the country ; and if different
operations of the fame kind, fliould, at the fame time, be carried
on by many different banks and bankers, the whole circulation may
thus be conducted with a fifth part only of the gold and filver which
would otherwife have been requifite.

Let

THE NATURE AND CAUSES OF

BOOK Let us fuppofe, for example, that the whole circulating money
of feme particular country amounted, at a particular time, to one
million fterling, that fum being then fufficient for circulating the
whole annual produce of their land and labour. Let us fappofe-
too, that fome time thereafter, different banks and bankers ifllied
promifiary notes, payable to the bearer, to the extent of one
million, referving in their different coffers two hundred thoufand
pounds for anfwering occafional demands. There would remain*
therefore, in circulation, eight hundred thoufand pounds in gold
and filver, and a million of bank notes, or, eighteen hundred
thoufand pounds of paper and money together. But the annual
produce of the land and labour of the country had before required
only one million to circulate and diftribute it to its proper
confumers, and that annual produce cannot be immediately aug-
mented by thofe operations of banking. One million, therefore,
will be fufficient to circulate it after them. The goods to be bought
and fold being precifely the fame as before, the fame quantity of
money will be fufficient for buying and felling them. The
channel of circulation, if I may be allowed fuch an expreffion, will
remain precifely the fame as before. One million we have fappofed
fufficient to fill tliat channel. Whatever, therefore, is poured
into it beyond this fum, cannot run in it, butmuft overflow. One
million eight hundred thoufand pounds are poured into it. Eight
hundred thoufand pounds, therefore, muft overflow, that fum
being over and above . what can be employed in the circulation of the
country. But though this fum cannot be employed at home, it is
too valuable to be allowed to lie idle. It will, therefore-, be lent
abroad,, in order to fesk that profitable employment- which it
cannot find at home. Biit the paper cannot go abroad becaufe at
a diilance from the banks v/hich iflae it, and from the country in
which payment of it can be. exafled by law, it will not be
received in common payments. Gold and filver, therefore, to the

amount.

.THE WEALTH OF NATIONS

amount of eight hundred thoufand pounds will be fent abroad, and C
the channel of home circulation will remain filled with a million
of paper, inftead of the million of thofe metals which filled it
before.

But though fo great a quantity of gold and filver is thus fent
abroad, we muft not imagine that it is fent abroad for nothing, or
that its proprietors make a prefent of it to foreign nations. They
will exchange it for foreign goods of fome kind or another, in order
to fupply the confumption either of fome other foreign country or
of their own.

If they employ it in purchafing goods in one foreign country
in order to fupply the confumption of another, or in what is called
the carrying trade, whatever profit they make will be an addition to
the neat revenue of their own country. It is like a new fund, created
for carrying on a new trade ; domeftick bufinefs being now tranf-
a£led by paper, and the gold and filver being converted into a fund
for this new trade.

If they employ it in purchafing foreign goods for home con-
fumption, they may either, firft, purchafe fuch goods as are likely
to be confumed by idle people who produce nothing, fuch as foreign
wines, foreign filks, &c.j or, fecondly, they may purchafe an
additional ftock of materials, tools, and provifions, in order to
maintain and employ an additional number of induftrious people,
who re- produce, with a profit, the value of their annual con-
fumption.

Sa.far as it is employed in the firft way, it promotes prodigality,
increafes expence and confumption without increafing produ6lion,
or eftabUfhing any permanent fund for fupporting that expence,
and is in every refpe^l hurtful to the fociety.

Vol. I. Z z So

THE NATURE AND CAUSES OF

K So far as it is employed in the fecond way, it promotes induftryi
-J and though it incre'afes the confumption of the fociety, it provides
a permanent fund for iiipportlng that confumption, tiie people who
confame, re-producing, with a profit, the whole value of their
annual confumption. The grofs revenue of the fociety, the. annual
■produce of their land and labour, is increafed by the whole value
Which the labour of thofe workmen adds to the materials upon which
they are employed ; and their neat revenue by what remains df
this value, after dedu6i:ing what is neceffary for fupporting the
tools and inftruments of their trade.

That the greater part of the gold and filver which, being forced,
abroad by thofe operations of banking, is employed in purchafing
foreign goods for home confumption, is and muft be employed
in purchafing thofe of this fecond kind, feems, not only probable,
but almoft unavoidable. Though fome particular men may fome-
times increafe their expence very confiderably though their revenue
does not increafe at all, we may be afliired that no clafs or order
of men ever does fo ; becaufe, though the principles of common
prudence do not always govern the conduct of every individual,
they always influence that of the majority of every clafs or order.
But the revenue of idle people, confidered as a clafs or order,
cannot, in the fmalleft degree, be increafed by thofe operations of
banking. Their expence in general, therefore, cannot be much
increafed by them, though that of a few individuals among them
may, and in reality fometimes is. The demand of idle people,
therefore, for foreign goods, being the fame, or very nearly the
fame, as before, a very fmall part of the money, which being forced
abroad by thofe operations of banking, is employed in purchafing
foreign goods for home confumption, is likely to be employed in
purchafing thofe for their ufe. The greater part of it will naturally

THE WEALTH OF NATIONS.

25^

be (Icftined for the employment of induftry, and not for the main- C HA P.
tenance of idlenefs. '■^""^'"^

When we compute the quantity of induftry which the cir-
culating capital of any fociety can employ, we muft always have
regard to thpfe parts of it only, which conlift in provifions, mate-
rials, and finifned work : the other, Which confifts in money, and
which ferves only to circulate thofe three, muft always be dedu6led.
In order to put induftry into motion, three things are requifitei
materials to work upon, tools to work with, and the wages or
recompence for the fake of which the work is done. Money is
neither a material to work upon, nor a tool to work with ; and
though the wages of the workman are commonly paid to him in
money, his real revenue, Uke that of all other men, confifts, not in
the money, but in the money's worth j not in the metal pieces, but
in what can be got for them.

The quantity of induftry which any capital can employ, muft,
evidently, be equal to the number of workmen whom it can fupply
with materials, tools, and a maintenance fuitable to the nature of
the work. Money may be requifite for purchafing the mate-
rials and tools of the work, as well as the maintenance of the
workmen. But the quantity of induftry which the whole capital
can employ, is certainly not equal both to the money which pur-
chafes, and to the materials, tools, and maintenance, which are
purchafed with it j but only to one or other of thofe two values,
and to the latter more properly than to the former.

When paper is fubftituted in the room of gold and filver money^
the quantity of the materials, tools, and maintenance, which the
whole circulating capital can fupply, may be increafed by the whole
yalue of gold and filver which ufed to be employed in purchafmg

Z z 2 them.

THE NATURE AND CAUSES OF

K them. The whole value of the great wheel of circulation and
diftribution, is added to the goods which are circulated and
diftributed by means of it. The operation, in fome meafure, re-
fembles that of the undertaker of fome great work, who, in confe-
quence of fome improvement in mechanicks, takes down his old
machinery, and adds the difference between its price and that of
the new to his circulating capital, to the fund from which he fur-
nifhes materials and wages to his workmen*

What is the proportion which the circulating money of anyr
country bears to the whole value of the annual produce circulated
by means of it, it is, perhaps, impoflible to determine. It has
been computed by different authors at a fifth, at a tenth, at a
twentieth, and at a thirtieth part of that value. But how fmall
foever the proportion which the circulating money may bear
to the whole value of the annual produce, as but a part, and fre-
quently but a fmall part, of that produce, is ever deftined for. the
maintenance of induflry, it muft always bear a very confiderable
proportion to that part. When, therefore, by the fubflitution of
paper, the gold and filver necefTary for circulation is reduced to,
perhaps, a fifth part of the former quantity, if the value of only
the greater part of the other four-fifths be added to the funds which
are deftined for the maintenance of induftry, it muft make a very
confiderable addition to the quantity of that induftry, and, con-
fequently, to the value of the annual produce of land and;
labour.

An operation of this kind has, within thefe five and twenty or
thirty years, been performed in Scotland, by the eredlion of new
banking companies in almoft every confiderable town, and even in
fome country villages. The effects of it have been precifely thofe •
above defcribed. The bufmefs of the country is almoft entirely

carried.

THE WEALTH OF NATIONS.

carried on by means of the paper of thofe different banking C
companies, with which purchafes and payments of all kinds u
are commonly made. Silver very feldom appears, except in the
change of a twenty {hillings bank note, and gold ftill feldomer.
But though the conduct of all thofe different companies has not
been unexceptionable, and has accordingly required an a6l of
parliament to regulate it ; the country, notwithflanding, has
evidently derived great benefit from their trade. I have heard it
afferted, that the trade of the city of Glafgow doubled in about
fifteen years after the firfl ere6iion of the banks there ; and that the
trade of Scotland has more than quadrupled fmce the firft ereftion
of the two publick banks at Edinburgh, of which the one, called
The Bank of Scotland, was eflablifhed by a6l of parliament in
1695, the other, called The Royal Bank, by royal charter in
1727. Whether the trade, either of Scotland in general, or of
the city of Glafgow in particular, has really increafed in fo great
a proportion, during fo fhort a period,^ I do not pretend to
know. If either of them has increafed in this proportion, it feems
to be an effecSt too great to be accounted for by the fole operation
of this caufe. That the trade and induflry of Scotland, however*
have increafed very confiderably during this period, and that
the banks have contributed a good deal to this increafe, cannot
be doubted.

The value of the filver money which circulated in Scotland-
before the union, in 1707, and which immediately after it was
brought into the bank of Scotland in order to be re-coined;,
amounted to 41 1,117!. los. gd. fterling. No account has been
got of the gold coin; but it appears from the antient accounts of
the mint of Scotland, that the value of the gold annually coined
fomewhat exceeded that of the filver *.. There were a good many,
people too upon this occafion, who, from a diffidence of re*'
* See Rudiman's Preface to Anderfon's Diplomata, &c. Scotiae..

Vol. I. 2^ Z 3 ^ payment,.

358

THE NATURE AND CAUSES OF

B GO K payment, did not bring their filver into the bank of Scotland; and
' there was, befides, feme Englifli coin, which was not called
in. The whole value of the gold and filver, therefore, which
circulated in Scotland before the union, cannot be eftimated at
lefs than a million fterling. It feems to have conftituted almoft
tlie whole circulation of that country j for though the circulation
of the bank of Scotland, which had then no rival, was con-
fiderable, it feems to have made but a very fmall part of the
whole. In the prefent times the whole circulation of Scotland
cannot be eftimated at lefs than two millions, of which that part
-which confifts in gold and filver, moft probably, does not amount
to half a million. But though the circulating gold and filver of
Scotland have fuffered fo great a diminution during this period,
its real riches and profperity do not appear to have fuffered any.
Its agriculture, manufa6tures, and trade, on the contrary, the
annual produce of its land and labour,^ have evidently been
augmented.

It is chiefly by difcounting bills of exchange, that is, by ad-
vancing money upon them before they are due, that the greater
part of banks and bankers iflhe their promiffory notes. They
dedu6t always, upon whatever fum they advance, the legal
intereft till the bill fliall becomie due. The payment of the
bill, when it becomes due, replaces to the bank the value of
what had been advanced, together with a clear profit of the
intereft. The banker who advances to the merchant whofe
bill he difcounts, not gold and filver, but his own promiiTory
notes, has the advantage of being able to difcount to a greater
amount, by the whole value of his promiffory notes, which he
finds by experience, are commonly in circulation. He is thereby
enabled to make his clear gain of intereft on fo much a
larger fum.

The

THE WEALTH OF NATIONS.

359

The commerce of Scotland, which at prefent is not very great, C HA P.
was ftill more inconfiderable when t'lie tv/o firft banking com- v-—
panics were eftabhftied ; and thofe companies would have had but
little trade, had they confined their bufinefs to tlie difcounting of
bills of exchange. They invented, therefore, another method of
iffuing their promiifary notes ; by granting, what they called, cafli
accounts, that is, by giving credit to the extent of a certain fum,
(two or three thoufand pounds, for example), to any individual
who could procure two perfons of undoubted credit and good landed
eftate to become furety for him, that whatever money fhould be
advanced to him, within the fum for which the credit had been
given, fhould be repaid upon demand, together with the leg.tl
interefl. Credits of this kind are, I believe, commonly granted by
banks and bankers in all different parts of the world. But the
eafy terms upon which the Scotch banking companies accept of
re-payment are, fo far as I know, peculiar to them, and have,
perhaps, been the principal caufe, both of the great trade of thofe
compajiies, and of the benefit which the country has received
from it.

Whoever has a credit of this kind with one of thofe companies,,
and borrows a thoufand pounds upon it, for example, may repay
this fum piece-meal, by twenty and thirty pounds at a time, the
company difcounting a proportionable part of the interefl of the
^ great fum from the day on which each of thofe fmall fums is paid
in, till the whole be in this manner repaid. All merchants, there-
fore, and almofl all men of bufinefs, find it convenient to keep
fuch cafii accounts with them, and are thereby interefled to pro-
mote the trade of thofe companies, by readily receiving their notes
in all payments, and by encouraging all thofe with whom they
have any influence to do the fame. The banks, when their cuftomers •
apply to them for money, generally advance it to them in their own •

promiffaryy -

THE NATURE AND CAUSES OF

B O^O K promifTary notes. Thefe the merchants pay away to the manu-
iL-^yl^^j fa6lurers for goods, the manufa6lurers to the farmers for mate-
•rials and provifions, the farmers to their landlords for rent, the
landlords repay them to the merchants for the conveniencies and
luxuries with which they fupply them, and the merchants again
return them to the banks in order to balance their cafh accounts,
or to replace what they may have borrowed of them ; and thus
almoft the whole money bufinefs of the country is tranfa6ted
l>y means of them. Hence, the great trade of thofe companies.

By means of thofe cafh accounts every merchant can, without
imprudence, carry on a greater trade than he other wife could do.
If there are two merchants, one in London, and the other in
Edinburgh, who employ equal flocks in the fame branch of trade,
the Edinburgh merchant can, without imprudence, carry on a
greater trade, and give employment to a greater number of people
than the London merchant. The London merchant mufl always
Jveep by him a confiderable fum of money, either in his own
coffers, or in thofe of his banker, who gives him no interefl for
it, in order to anfwer the demands continually coming upon
him for payment of the goods which he purchafes upon credit. Let
the ordinary amount of this fum be fuppofed five hundred pounds.
The value of the goods in his warehoufe mufl always be iefs by
five hundred pounds than it would have been, had he not been
obliged to keep fuch a fum unemployed. Let us fuppofe that
he generally difpofes of his whole flock upon hand, or of
goods to the value of his whole flock upon hand, once in the
year. By being obliged to keep To great a fum unemployed, he
mufl fell in a year five hundred pounds worth lefs goods than he
might otherv\ife have done. His annual profits mufl be lefs by
all that he could have made by the fale of five hundred pounds
worth more goods j and the number of people employed in pre-
paring his goods for the market, mufl be lefs by all thofe that

five

THE WEALTH OP NATIONS.-

five hundred pounds more ftock could have employed. The ^ A. P.
merchant in Edinburgh, on the other hand, keeps no money u-v-— J
unemployed for anfwering fuch occafional demands. When they
actually come upon him, he fatisfies them from his cafh account
with the bank, and gradually replaces the fum borrowed with tiie
money or paper which comes in from the occafional fales of his
goods. With the fame ftock, therefore, he can, without imprudence,
have at all times in his warehoufe a larger quantity of goods
than the London merchant ; and can thereby both make a greater
profit himfelf, and give conftant employment to a greater number
of induftrious people who prepare thofe goods for the market.
Hence the great benefit which the country has derived from this
trade.

The facility of difcounting bills of exchange, it may be thought
indeed, gives the Englifh merchants a conveniency equivalent
to the cafti accounts of the Scotch merchants. But the Scotch
merchants, it muft be remembered, can difcount their bills of ex-
change as eafily as the Englifii merchants j and have, befides, the
additional conveniency of their cafh accounts.

The whole paper money of every kind which can eafily circu-
late in any country never Can exceed the value of the gold and
filver, of which it fupplies the place, or which (the commerce
being fuppofed the fame) would circulate there, if there was no
paper money. If twenty (hilling notes, for example, are the
loweft paper money current in Scotland, the whole of that cur-
rency which can eafily circulate tliere cannot exceed the fum
of gold and filver, which would be necefiary for tranfafling
the annual exchanges of twenty (hillings vahie and upwards
ilfually tranfaded within that country. Should the circulating
paper at any time exceed that fum, as the excefs could neither

Vol. I. 3 A be

362

THE NATURE AND CAUSES OF

^ ^ ^^^^ abroad nor be employed in the circulation of the country, it
muft immediately return upon the banks to be exchanged for
gold and filver. Many people would immediately perceive that
they had more of this paper than was neceflary for tranfacling
their bufinefs at home, and as they could not fend it abroad,
they would immediately demand payment of it from the banks.
When this fuperfluous paper was converted into gold and filver,
they could eafily find a ufe for it by fending it abroad i but they
could find none while it remained in the fhape of paper. There
would immediately, therefore, be a run upon the banks to the
whole extent of this fuperfluous paper, and, if they fhowed any
difficulty or backwardnefs in payment, to a much greater extent ;
the alarm, which this would occafion, necelTarily increafing the
run.

Over and above the expences which are common to every
branch of trade ; fuch as the expence. of houfe-rent, the wages
of fervants, clerks, accountants, 6cc. ; the expences peculiar to a
bank confifl chiefly in two articles : Firft, in the expence of keep-
ing at all times in its coffers, for anfwering the occafional demands
of the holders of its notes, a large fum of money, of which it
lofes the interefl .: And, fecondly, in the expence of replenifhing
thofe coffers as fafl as they are emptied by anfwering fuch occa.-
fional demands.

A BANKING company which iffues more paper than can be
employed in the circulation of the country, and of which the
excefs is continually returning upon them for payment, ought to
increafe the quantity of gold and filver, which they keep at all
times in their coffers, not only in proportion to this exceflive
increafe of their circulation, but in a much greater proportion ;
their notes returning upon them much failer than in proportion

4, to

THE WEALTH OF NATIONS.

to the excefs of their quantity. Such a company, therefore, C H^A P.

ought to increafe the firft article of their expence, not only in u-— v-h
proportion to this forced increafe of their bufinefs, but in a much
greater proportion.

The coffers of fuch a company too, though they ought to
be filled much fuller, yet mufl empty themfelves much fafter than
if their bufmefs was. confined within more reafonable bounds, and
muft require, not only a more violent, but a more conflant and
uninterrupted exertion of expence in order to replenifh them.
The coin too, which is thus continually drawn in fuch large
quantities from their coffers, cannot be employed in the circula-
tion of the country. It comes in place of a paper which is over
and above what can be employed in that circulation, and is there-
fore, over and above what can be employed in it too. But as
that coin will not be allowed to lie idle, it mufl, in one fhape
or another, be fent abroad, in order to find that profitable employ-
ment which it cannot find at home ; and this continual exportation
cf gold and filver, by enhancing the difficulty, muft neceffarily
enhance ftill further the expence of the bank, in finding new
gold and filver in order to replenifli thofe coffers, which empty
themfelves fo very rapidly. Such a company, therefore, muft,
in proportion to this forced increafe of their bufinefs, increafe
the fecond article of their expence ftill more than the firft.

Let us fuppofe that all the paper of a particular bank, which the
circulation of the country can eafily abforb and employ, amounts
exa6tly to forty thoufand pounds ; and that for anfwering occafional
demands, this bank is obliged to keep at all times in its coffers ten
thoufand pounds in gold and filver. Should this bank attempt
to circulate forty-four thoufand pounds, the four thoufand pounds
which are over and above what the circulation can eafily abforb

3 A 2 and

364

THE NATURE AND CAUSES OF

5 00 K and employ, will return upon it ahnoft as faft as tliey are iffuedl
Smm-^^mj For anfwering oceafional demands, therefore, tliis bank ought to

keep at all times in its coffers, not eleven thoufand pounds only^ -
but fourteen thoufand pounds. It will thus gain nothing by
the intereft of the four thoufand pounds exceffive circulation
and it will lofe the whole expence of continually colle6ting four
thoufand pounds in gold and filver which will be continually
going out of its coffei's as fall as they are brought inta them.

Had every particular banking company always underftood and
attended to its own particular intereft, the circulation never
could have been overftocked with paper money. But every par-
ticulai* banking company has not always underftood or attended
to its own particular intereft, and the circulation has frequently
been overftocked with paper money.

By iffuing too great a quantity of paper, of which the excefs;
was continually returning, in order to be exchanged for gold and
filver, the bank of England was for many years together obliged to-
coin gold to the extent of between eight hundred thoufand pounds
and a million a year ; or at an average, about eight hundred and fifty
thoufand pounds. For this great coinage, the bank (in confe-
quence af the worn and degraded ftate into which the gold coin
had fallen a few years ago) was frequently obliged to purchafe gold
bullion at the high price of four pounds an ounce, which it
foon after iffued in coin at 3 1. 17s. lod. -i an ounce, lofmg in
this manner between two and a half and three per cent, upon
the coinage of fo very large a fum. Though the bank there-
fore paid no feignorage, though the government was properly
at the expence of the coinage, this liberality of government
did not prevent altogether the expence of the bank..

The

THE WEALTH OF NATIONS

The Scotch banks, in confequence of an excefs of the fame
kind, were all obliged to employ conftantly agents at London
to colIe£t money for them, at an expence which was feldom below
one and a half or two per cent. This money was fent down
by the waggon, and infared by the carriers at an additional expence
of three quarters per cent, or fifteen fhillings on the hundred
pounds. Thofe agents were not always able to replenifh the
coffers of their employers fo faft as they were emptied. In this
cafe the refource of the banks was, to draw upon their correfpon-
dents in London bills of exchange to the extent of the fum which
they wanted. When tlKjfe correfpondents afterwards drew upon
them for the payment of this fum, together with the intereft,
and a commiflion, fome of thofe banks, from the diftrefs into
which their excelTive circulation had thrown them, had fometimes
no other means of fatisfying this draught but by drawing a
fecond fett of bills either upon the fame, or upon fome other
correfpondents in London ; and the fame fum, or rather bills for
the fame fum, would in this manner make fometimes more than
two or three journies ; the debtor, bank, paying always the in-
tcreft and commiffion upon the whole accumulated fum. Even
thofe Scotch banks which never diftinguifhed themfelves by their
extream imprudence, were fometimes obliged to employ this ruinous
refource.

The gold coin which was paid out either by the bank of
England, or by the Scotch banks^, in exchange for that part of
their paper which was over and above what could be employed
in the circulation of the country, being like wife over and above
what could be employed in that circulation, was fometimes fent
abroad in the fhape of coin, fometimes melted down and fent
abroad in the fhape of bullion,, and fometimes melted down and
'fold to the bank of England at the high price of four pounds

7 an

366 THE NATURE AND CAUSES OF

BOOK an ounce. It was the neweft, the heavlefl:, and the beft pieces
f^^^l^ only which were carefully picked out of the whole coin, and either
fent abroad or melted down. At home, and while they remained
in the fliape of coin, thofe heavy pieces were of no more value
• than the light : But they were of more value abroad, or when melted
(down into bullion, at home. The bank of England, notwithftanding
their i great annual coinage, found to their aftonifhment, that
there was every year the fame fcarcity of coin as there had been
the year before; and that notwithftanding the great quantity
of good and new coin which was every year iffued from the
bank, the ftate of the coin, inftead of growing better and better,
became every year worfe and worfe. Every year they found
themfelves under the neceflity of coining nearly the fame quantity
of gold as they had coined the year before, and from the con-
tinual rife in the price of gold bullion, in confequence of the
jcontinual wearing Jxid clipping of the coin, the expence of this
great annual coinage became every year greater and greater. The
bank of England, it is to be obferved, by fuppiying its own
cofiers with coin, is indireftly obliged to fupply the whole kingdom,
into which coin is continually flowing from thofe coffers in a
great variety of ways. Whatever coin therefore was wanted
to fupport this exceffive circulation both of Scotch and Englifh paper
money, whatever vacuities this exceffive circulation occafioned in
the neceflary coin of the kingdom, the bank of England was
obliged to fupply them. The Scotch banks, no doubt, paid all
of them very dearly for their own imprudence and inattention.
But the bank of England paid very dearly, not only for its own
imprudence, but for the much greater imprudence of almoft all
the Scotch banks.

The over trading of fome bold proje6lors in both parts of
the united kingdom, was the original caufe of this exceffive cir-
culation of paper money.

What

THE WEALTH OF NATIONS.

What a bank can with propriety advance to a merchant or ^
undertaker of any kind, is not, either the whole capital with
which he trades, or even any confiderable part of that capital ;
but that part of it only, which he would otherwife be obliged
to keep by him unemployed, and in ready money for anfwering
occafional demands. If the paper money which the bank advances
never exceeds this value, it can never exceed the value of the
gold and filver, which would necelTarily circulate in the country
if there was no paper money j it can never exceed the quan-
tity which the circulation of the country can eafily abforb and
employ.

When a bank difcounts to a merchant a real bill of exchange
drawn by a real creditor upon a real debtor, and which, as foon
as it becomes due, is really paid by that debtor; it only advances
to him a part of the value which he would otherwife be obliged
to keep by him unemployed, and in ready money for anfwer-
ing occafional demands. The payment of the bill, when it
becomes due, replaces to the bank the value of what it had
advanced, together with the intereft. The coffers of the bank, fo
far as its dealings are confined to fuch cuflomers, refemble a
water pond, from which, though a ftream is continually running,
out, yet another is continually running in, fully equal to that
which runs out j fo that, without any further care or attention,
the pond keeps always equally, or very near equally full. Little or
no expence can ever be ^ecefTary for replenilhing the coffers of
fuch a bank^

A MERCHA:NT, without over-trading, may frequently have
occafion for a fum of ready money, even when he has no bills to
difcount. When a bank, befides difcounting his bills, advances
him likewife upon iiich occafions, fuch fum s upon his cafh account^
and accepts of a piece-meal repayment as the money comes inu

Vol. L 3-^4 fromi

368

THE NATURE AND CAUSES OF

B Q^O K ffom the oocafional Tale of his goods, upon the eafy terms of the
V-v-^ banking companies of Scotland ; it difpenfes him entirely from
the neceflity of keeping any part of his ftock by him unemployed,
and in ready money for anfwering occafional demands. When
fuch demands ^finally come upon him, he can anfwer them fuf-
ficiently from his cafli account. The bank, however, in deal-
ing with fuch cuftomers, ought to obferve with great attention,
'wiiether in the courfe of fome fhort period (of four, five, fix,
or eight months, for example) the fum of the repayments which
It commonly receives from them, is, or is not, fully equal to
that of the advances which it commonly makes to them. If,
within the courfe of fuch fhort periods, the fum of the re-
payments from certain cuftomers is, upon moft occafions, fully
equal to that of the advances, it may fafely continue to deal
with fuch cuftomers. Though the ftream which is in this cafe
continually running out from its coffers may be very large, that
which is continually running into them muft be at leaft equally
large j fo that without any further care or attention thofe coffers
are likely to be always equally or very near equally full ; and fcarce
ever to require any extraordinary expence to replenifh them. If,
on the contrary, the fum of the repayments from certain other
cuftomers falls commonly very much fliort of the advances which
it makes to them, it cannot with any fafety continue to deal
with fuch cuftomers, at leaft if they continue to deal with it
in this manner. The ftream which is in this cafe continually
running out from its coffers is neceffarily much larger than that
which is continually running in-, fo that, unlefs they are reple-
niflied by fome great and continual effort of expence, thofe
coffers muft foon be exhaufted altogether.

The banking companies of Scotland, accordingly, were for
a long time very careful to require frequent and regular repay-
ments

THE WEALTH OF NATIONS.

ments from all their cuftomers, and did not care to deal with C
any perfon, whatever might be his fortune or credit, who did u
not make, what they called, frequent and regular operations
with them. By this attention, befides faving almoft entirely
the extraordinary expence of replenifhing their coffers, they gained
two other very confiderable advantages.

First, by this attention they were enabled to make fomc
tolerable judgement concerning the thriving or declining cir-
cumftances of their debtors, without being obliged to look out
for any other evidence befides what their own books afforded
them 5- men being for the mofl part either regular or irregular
in their repayments, according as their circumflances are either
thriving or declining. A private man who lends out his money
to perhaps half a dozen or a dozen of debtors, may, either by
himfelf or his agents, obferve and enquire both conftantly and
carefully into the, condu6l and fituation of each of them. But
a banking company", which lends money to perhaps five hundred
different people, and of which the attention is continually occu-
pied by objects of a very different kind, can have no regular
information concerning the condu6l and circumflances of the
greater part of its debtors beyond what its own books afford
it. In requiring frequent and regular re-payments from all
their cuflomers, the banking companies of Scotland had probably
this advantage in view.

Secondly, by this attention they fecured themfelves from
the pofTibility of ifTuing more paper money than what the cir-
culation of the country could ealily abforb and employ. When
they obferved that within moderate periods of time the re-pay-
ments of a particular cuffomer were upon mofl occafions fully
equal to the advances which they had made to him, they might

Vol. I. 3 B be

THE NATURE AND CAUSES OF

K be affured that the paper money which they had advanced to him,
mj had not at any time exceeded the quantity of gold and filver
which he would otherwife have been obliged to keep by him
for anfwering occafional demands ; and that confequently the paper
money which they had circulated by his means had not at any
time exceeded the quantity of gold and filver which would have
circulated in the country, had there been no paper money. The
frequency, regularity and amount of his re- payments would
fufficiently demonftrate that the amount of their advances had
at no time exceeded that part of his capital which he would
otherwife have been obliged to keep by him unemployed, and
in ready money for anfwering occafional demands; that is,
for the purpofe of keeping the reft of his capital in conftant
employment. It is this part of his capital only which, within
moderate periods of time, is continually returning to every dealer
in the fhape of money, whether paper or coin, and continually
going from him in the fame fliape. If the advances of the bank
had commonly exceeded this part of his capital, the ordinary
amount of his re-payments could not, within moderate periods
of time, have equalled the ordinary amount of its advances.
The ftream which, by means of his dealings, was continually
running into the coffers of the bank, could not have been equal
to the ftream which, by means of the fame dealings, was con-
tinually running out. The advances of the bank paper, by exceed-
ing the quantity of gold and filver which, had there been no
fuch advances, he would have been obliged to keep by him for
anfwering occafional demands, might foon come to exceed the whole
quantity of gold and filver which (the commerce being fuppofed the
fame) would have circulated in the country had there been no paper
money and confequently to exceed the quantity which the cir-
culation of the country could eafily abforb and employ ; and the
excefs of this paper money would immediately have returned upon

the

THE WEALTH OF NATIONS.

371

tl^e bjink in order to be exchanged for gold and filver. This fecond C H^A P.
^dvant^e, though equally real, was not perhaps fo well underftood u« 1^
by all the different banking companies of Scotland as the firfl.

When, partly by the conveniency of difcounting bills, and
partly by that of cafti accounts, the creditable traders of any
country can be difpenfed from the neceffity of keeping any part
of their /lock by them, unemployed and in ready money, for
anlwering occafional demands, they can reafonably expeft no
-fui ther affiftance from banks and bankers, who, when they have
gone thus far, cannot, confiftently with their own intereft and
fafety, go farther. A bank cannot, confiftently with its own
intereft, advance to a trader the whole or even the greater part
of the circulating capital with which he trades j becaufe, though
that capital is continually returning to him in the ftiape of money,
and going from him in the fame ihape, yet the whole of the re-
turns is too diftant from the whole of the out-goings, and the
fum of his repayments could not equal the fum of its advances
within fuch moderate periods of time as fuit the conveniency of
a bank. Still lefs could a bank afford to advance him any con-
fiderable part of his fixed capital ; of the capital which the un-
dertaker of an iron forge, for example, employs in erecting his
forge and fm citing- houfe, his work-houfes and warehoufes, the
dwelling houfes of his workmen, &c. ; of the capital which the
undertaker of a mine employs in fmking his ftiafts, in erecting
engines for drawing out the water, in making roads and waggon-
ways, &c. ; of the capital which the perfon who undertakes to improve
land employs in clearing, draining, enclofmg, manuring and
ploughing wafte and uncultivated fields, in building farm-houfes,
with all their neceffary appendages pf ftables, granaries, &c.
The returns of the fixed capital are in almoft all cafes much
flower than thofe of the circulating capital ; and fuch expences,-

3 B 2 even

372 THE NATURE AND CAUSES OF

BOOK even when laid out with the greateft prudence and judgement^
very feldom return to the undertaker till after a period of many
years, a period by far too diftant to fuit the conveniency of a
bank. Traders and other undertakers may, no doubt, with
great propriety, carry on a very confiderable part of their proje6ls
with borrowed money. In juftice to their creditors, however, thek
own capital ought, in this cafe, to be fufficient to enfure, if I
may fay fo, the capital of thofe creditors; or to render it ex-
treamly improbable that thofe creditors fhould incur any lofs, even
though the fuccefs of the projeft fhould fall very much fhort of
the expeftation of the proje6lors. Even with this precaution
too, the money which is borrowed, and which it is meant fhould
not be repaid till after a period of feveral years, ought not to
be borrowed of a bank, but ought to be borrowed upon bond
or mortgage, of fuch private people as propofe to live upon the
interefl of their money, without taking the trouble themfelves
to employ the capital; and who are Upon that account wilUng
to lend that capital to fuch people of good credit as are hkely to
keep it for feveral years. A bank, indeed, which lends its money
without the expence of ftampt paper, or of attornics fees for
drawing bonds and mortgages, and which accepts of repayment
upon the eafy terms of the banking companies of Scotland ;
would, no doubt, be a very convenient creditor to fuch traders
and undertakers. But fuch traders and undertakers would, furely,
be moft inconvenient debtors to fuch a bank.

It is now more than five and twenty years fmce the paper
money iffued by the different banking companies of Scotland
was fully equal, or rather was fomewhat more than fully equal
to what the circulation of the country could eafily abforb and
employ. Thofe companies, therefore, had fo long ago given,
all the aflillance to the traders and other undertakers of Scotland

which

THE WEALTH OF NATIONS:

373

which it is pofUble for banks and bankers, confiftently with C HA P.
fheir own intereft, to give. They had even done fomewhat c*' V*'"^.
more. They had over-traded a little, and had brought upon them-
felves that lofs, or at leafl: that diminution of profit, which in
this particular bufniefs never fails to attend the fmalleft degree
of over-trading. Thofe traders and other undertakers, having got
fo much affiftance from banks and bankers, wilhed to get ftill
more. The banks, they feem to have thought, could extend
their credits to whatever fum might be wanted, without incurring
any other expence befides that of a few reams of paper. They
complained of the contra6led views and daftardly fpirit of the
diredlors of thofe banks, which did not, they faid, extend their
credits in proportion to the extenfion of the trade of the coun-
try; meaning, no doubt, by the extenfion of that trade, the
extenfion of their own projects beyond what they could carry
on, either with their own capital, or with what they had credit
to borrow of private people in the ufual way of bond or mort-
gage. The banks, they fceni to have thought, were in honour
bound to fupplv the deficiency, and to provide them with all
the capital which they wanted to trade with. The banks, how-
ever, were of a different opinion, and upon their refufing to
extend their credits, fome of thofe traders had recourfe to an
expedient which, for a time, ferved their purpofe, though at a
much greater expence, yet as effectually as the utmofl extenfion
of bank credits could have done. This expedient was no other
than the well-known fhift of drawing and re-drawing ; the fliift
to which unfortunate traders have fometimes recourfe when they
are upon the brink of bankruptcy. The practice of raifing
money in this manner had been long known in England, and
during the courfe of the late war, when the high profits of
trade afforded a great temptation to over- trading, is faid to have
been carried on to a very great extent. From England it was

7 brought

374

THE NATURE AND CAUSES OF

B op K brought into Scotland, where, in proportion to the very limited
^^^^ — . commerce, and to the very moderate capital of tlie country, it

was foon carried on to a much greater extent tl;ian it ever h^d

ibeen in Eng. and.

The praflice of drawing and re-drawing is fo well known
to all men of bufmefs, that it may perhaps be thought unneceflary
to give any account of it But as this book may come intp
-the hands of many people, who are not men of bufmefs, and
as the effects of this practice upon the banking trade are not
perhaps generally underftood even by men of bufmefs them-
felves, I fhail endeavour to explain it as diftin6lly as I can.

The cuftoms of merchants, which were eftabliflied when the
barbarous laws of Europe did not enforce the performance of
their contradls, and which during the courfe of the two laft centuries
have been adopted into the laws of all European nations, have
given fuch extraordinary privileges to bills of exchange, that
money is more readily advanced upon them, than upon any other
fpecies of obligation j efpecially when they are made payable within
fo fhort a period as two or three months after their date. If when
the bill becomes due, the acceptor does not pay it as foon as it
is prefented, he becomes from that moment a bankrupt. The
bill is protefted, and returns upon the drawer, who, if he does not
immediately pay it, becomes likewife a bankrupt. If before it
caiTie to the perfoii who prefents it to the acceptor for pay-
ment, it had paffed through the hands of feveral other perfons,
who had fucceflively advanced to one another the contents of it
either in money or goods, and who, to exprefs that each of them
had in his turn received thofe contents, had all of them in their
order endorfed, that is, written their names upon the back of
the bill ; each endorfer becomes in his turn liable to the owner

THE WEALTH OF NATIONS.

of the bill for thofe contents, and if he fails to pay he becomes C
too from that moment a bankrupt. Though the drawer, ac- \^
ceptor, and endorfers of the bill fhould, all of them, be perfons
of doubtful credit; yet ftill the fliortnefs of the date gives fome
fecuiity to the owner of the bill. Though all of them may be
very likely to become bankrupts j it is a chance if they all become
fo in fo ftiort a time. The houfe is crazy, fays a weary traveller
to himfelf, and will not ftand very long ; but it is a chance if
it falls to-night, and I will venture, therefore, to fleep in it
to-night.

The trader A in Edinburgh, we fhall fuppofe, draws a biy upon
B in London, payable two months after date. In reality B in
London owes nothing to A in Edinburgh j but he agrees to accept
of A's bill, upon condition that before the term of payment he
lhall redraw upon A in Edinburgh, for the fame fum, together
with the intereft and a commiflion, another bill, payable likewife
two months after date. B accordingly, before the expiration of
the firft two months, re-draws this bill upon A in Edinburgh ;
who again, before the expiration of the fecond two months,
draws a fecond bill upon B in London, payable likewife two
months after date; and before the expiration of the third two
months, B in London re-draws upon A in Edinburgh an-
other bill, payable alfo two months after date. This pra6lice
has fometimes gone on, not only for feveral months, but for
feveral years together, the bill always returning upon A. in
Edinburgh, with the accumulated intereft and commiflion of
all the former bills. The intereft was five per cent, in the
year, and the commiflion was never lefs than one half per cent,
on each draught. This commiflion being repeated more than
fix times in the year, whatever money A might raife by this ex-
pedient muft neceflTarily have coft him fomething more than eigliti

4 P^^-

376 THE NATURE AND CAUSES OF

BOOK per cent, in the year, and fometimes a great deal more ; when
j.,^-v---^ eitlier the price of the comraifiion happened to rife, or when
he was obliged to pay compound intereft upon the intereft and
commiflion of former bills. This pra6lice was called raifing
money by circulation^

In a <:ountry where the ordinary profits of ftock in the
greater part of mercantile projects are fuppofed to run between
fix and ten per cent, j it muft have been a very fortunate fpe-
culation of which the returns could not only repay tiie enor-
mous expence at which the money was thus borrowed for car-
rying it on; but afford, befides, a good furplus profit to the pro-
je6lor. Many vaft and extenfive proje6ts, however, were under-
taken, and for feveral years carried on without any other fund to
fupport them befides what was raifed at this enormous expence.
The projeclors, no doubt, had in their golden dreams the moft
diftinft vifion of this great profit. Upon their awaking, however,
either at the end of their proje6ls, or when they were no longer
able to carry them on, they very feldom, 1 believe, had the good
fortune to find it.

The bills which A in Edinburgh drew upon B in London, he
regularly difcounted two months before they were due with fome
bank or banker in Edinburgh; and the bills which B in London
re-drew upon A in Edinburgh, he as regularly difcounted cither
with the bank of England, or with fome other bankers in Lon-
don. Whatever was advanced upon fuch circulating bills was, in
Edinburgh, advanced in the paper of the Scotch banks, and in
London, when tliey were difcounted at the bank of England, in
the paper of that bank. Though the bills upon which this paper
had been advanced, were all of them re})aid in their turn as fdon
a's they became due; yet the value which had been really ad-
vanced

THE WEALTH OF NATIONS.

377

vanced upon the firft bill, was never really returned to the banks C HA P.
which advanced it; becaufe before each bill became due, another u—
bill was always drawn to fomewhat a greater amount than the bill
which was foon to be paid ; and the difcounting of this other bill
was efTentially neceflary towards the payment of that which was
foon to be due. This payment, therefore, was altogether fiditi-
ous. The ftream, which by means of thofe circulating bills of
exchange, had once been made to run out from the coffers of the
banks, was never replaced by any ftream which really run into
them.

The paper which was iflued upon thofe circulating bills of
exchange, amounted, upon many occafions, to the whole fund
deftined for carrying on' fome vaft and extenfive projei^ of agri-
culture, commerce, or manufaflures; and not merely to that
part of it which, had there been no paper money, the proje6lor
would have been obliged to keep by him, unemployed and in ready
money, for anfwering occafional demands. The greater part of
this paper was, confequently, over and above the value of the
gold and filver which would have circulated in the country, had
there been no paper money. It was over and above, therefore,
what the circulation of the country could eafily abforb and em-
ploy, and, upon that account, immediately returned upon the
banks in order to be exchanged for gold and filver, which they
were to find as they could. It was a capital which thofe
pro]e6tors had very artfully contrived to draw from thofe banks,
not only without their knowledge or deliberate confent, but for
fome time, perhaps, without their having the moft diftant fufpicion
that they had really advanced it.

. When two people, who are continually drawing and re-drawing
upon one another, difcount their bills always with the fame banker.
Vol. I. 3 C he

378 THE NATURE AND CAUSES OF

BOOK he muft immediately difcover what they ai'e about, and fee dearly
' that they are trading, not with any capital of their own, but with
the capital which he advances to them. But this difcovery is not al-
together fo eafy when they difcount their bills fometimes with one
banker, and fometimes with another, and when the fame two per-
fons do not conflantly draw and re- draw upon one another, but
occafiOnally run the round of a great circle of projectors, who find
it for their interesft to afiift one another in this method of raifing
money, and to render it, upon that account, as difficult as pof-
fibleto diftinguifh between a real and a fi6litious bill of exchange;
between a bill drawn by a real creditor upon a real debtor, and a.
bill for which there was properly no real creditor but the bank
which difcounted it; nor any real debtor but the proje6lor who
made ufe of the money. When a banker had even made this
difcovery, he might fometimes make it too late, and might find
that he had already difcounted the bills of thofe proje6lors to fo
great an extent, that by" refufing to difcount any more, he would
necelTarily make them all bankrupts, and thus, by ruining them,
might perhaps ruin himfelf. For his own intereft and fafety,.
therefore, he might find it necelTary, in this very perilous fituation,
to go on for fome time, endeavouring, however, to withdraw
gradually, and upon that account making every day greater and
greater difficulties about difcounting, in order to force thofe projec-
tors by degrees to have recourfe, either to other bankers, or to
other methods of raifing money; fo as that he himfelf might, as-
foon as poffible, get out of the circle. The difficulties, accordingly,
which the bank of England, which the principal bankers in
London, and which even the more prudent Scotch banks began,,
after a certain time, and when all. of them had already gone too
far, to make about difcounting, not only alarmed, but enraged
in the higheft degree thofe projectors . Their own diftrefs, of
which this prudent and neceffary refer ve of the banks, was, no

doubt,.

THE WEALTH OF NATIONS. , ^jt

doubt, the immediate occafion, they called the diftrefs of the coun- cH'AP.
try; and this diftrefs of the country, they faid, was altogether - j
owing to the ignorance, pufillanimity, and bad conduct of the
banks, which did not give a fufficiently liberal aid to the fpirited
undertakings of thofe who exerted themfelves in order to beautify,
improve, and enrich the country. It was the duty of the banks,
they feemed to think, to lend for as long a time, and to as great
an extent as they might wifh to borrow. The banks, however,
by refufmg in this manner to give more credit to thofe to whom
they had already given a great deal too much, took the only method
by which it was now poflible to fave either their own credit, or the
publick credit of the country.

In the midft of this clamour and diftrefs, a new bank was efta-
blifhed in Scotland for the exprefs purpofe of relieving the diftrefs
of the country. The defign was generous ; but the execution
was imprudent, and the nature and caufes of the diftrefs which it
meant to relieve, were not, perhaps, well underftood. This bank
was more liberal than any other had ever been, both in granting
cafti accounts, and in difcounting bills of exchange. With regard
to the latter, it feems to have made fcarce any diftin6lion between
real and circulating bills, but to have difcounted all equally. It
was the avowed principle of this bank to advance, upon any rea-
fonable fecurity, the whole capital which was to be employed in
improvements of which the returns are the moft flow and diftant,
fuch as the improvements of land. To promote fuch improvements
was even faid to be the chief of the publick Ipirited purpofes for
which it was inftituted. By its liberahty in granting cafti accounts,
and in difcounting bills of exchange, it, no doubt, iffued great
quantities of its bank-notes. But thofe bank-notes being, the
greater part of them, over and above what the circulation of the
country could eafily abforb and employ, returned upon it, in

3 C 2 order

THE NATURE AND CAUSES OP

K order to be exchanged for gold and filver, as faft as they were
-» ifliied. Its coffers were never well filled. The capital which had
been fubfcribed to this bank at two different fubfcriptions, amounted
to one hundred and fixty thoufand pounds, of which eighty per
cent, only was paid up. ' This fum ought to have been paid in
at feveral different inftallments. A great part of the proprietors,
when they paid in their firfl inflallment, opened a calli account
with the bankj and the directors, thinking themfelves obliged to
treat their own proprietors with the fame liberality with which they
treated all other men, allowed many of them to borrow upon this
cafli account what they paid in upon all their fubfequent inflall-
ments. Such payments, therefore, only put into one coffer, what had
the moment before been taken out of another. But had the coffers of
this bank been filled ever fo well, its exceflive circulation rnufl
have emptied them fafter than they could have been replenifhed
by any other expedient but the ruinous one of drawing upon Lon-
don, and when the bill became due, paying it, together with
interefl and commiffion, by another draught upon the fame place.
Its coffers having been filled fo very ill, it is faid to have been
driven to this refource within a very few months after it began to
do bufmefs. The eflates of the proprietors of this bank were
worth feveral millions, and by their fubfcription to the original
bond or contra6l of the bank, were really pledged for anfwering
all its engagements. By means of the great credit which fo great
a pledge neceffarily gave it, it was, notwithflanding its too liberal
condudl, enabled to carry on bufmefs for more than two years.
When it was obliged to flop, it had in the circulation about
two hundred thoufand pounds in bank-notes. In order to fup-
port the circulation of thofe notes, which were continually return-
ing upon it as faff as they were iffued, it had been conftantly
in the pra6lice of drawing bills of exchange upon London, of
which the number and value were continually increafing, and,

4 when

THE WEALTH OF NATIONS.

when it ftopt, amounted to upwai'ds of fix hundred thoufand C
pounds. This bank, therefore, had, in little more than the
courfe of two years, advanced to different people upwards of
eight hundred thouf?nd pounds at five per cent. Upon the two
hundred thoufand pounds which it circulated in bank-notes, this
five per cent, might, perhaps, be confidered as clear gain, without
any other deduflion befides the expence of management. But
upon upwards of fix hundred thoufand pounds, for which it was.
continually drawing bills of exchange upon London, it was paying,
in the way of intereft and commifTion, upwards of eight per
cent, and was confequently lofing more than three per cent, upon
more than three-fourths of all its dealings.

The operations of this bank feem to have produced efFe6ls quite
oppofite to thofe which were intended by the particular perfons
who planned and dire6led it. They feem to have intended to fup-
port the fpirited undertakings, for as fuch they confidered them;^
which were at that time carrying on in different parts of the coun-
try ; and at the fame time, by drawing the whole banking bufinefs
to themfelves, to fupplant all the other Scotch banks ; particularly
thofe eflablifhed at Edinburgh, whofe backwardnefs in difcounting
bills of exchange had given fome offence. This bank, no doubt,
gave fome temporary relief to thofe projectors, and enabled them
to carry on their proje6ls for about two years longer than they
could otherwife have done. But it thereby only enabled them to
get fo much deeper into debt, fo that when ruin came, it fell fo
much the heavier both upon them and upon their creditors. The
operations of this bank, therefore, inflead of relieving, in reality-
aggravated in the long-run the diflrefs which thofe proje6lors had
brought both upon themfelves and upon their country. It would have
been much better for themfelves, their creditors and their country,
had the greater part of them been obliged to flop two years fooner

than

;82 THE NATURE AND CAUSES OF

BOOK than they a6lually did. The temporary relief, however, which
u— v~' this bank afforded to thofe projeftors, proved a real and permanent
relief to the other Scotch banks. All the dealers in circulating bills
of exchange, which thofe other banks had become fo backward in
difcounting, had recourfe to this new bank, where they were re-
ceived with open arms. Thofe other banks, therefore, were
enabled to get very eafily out of that fatal circle, from which they
could not otherwife have difcngaged themfelves without incurring
a confiderable lofs, and perhaps too even fome degree of dif-
credit.

In the long-run, therefore, the operations of this bank increafed
the real diftrefs of the country which it meant to relieve; and
effeclually relieved from a very great diftrefs thofe rivals whom it
meant to fupplant.

At the firft: fetting out of this bank, it was the opinion of fome
people, that how fail foever its coffers might be emptied, it might
eafily repleniOi them by raifmg money upon the fecurities of thofe
to whom it had advanced its paper. Experience, I believe, foon
convinced them that this method of raifmg money was by much
too flow to anfwer their purpofe ; and that coffers which originally
were fo ill filled, and which emptied themfelves fo very fafl, could
be replenifhed by no other expedient but the ruinous one of drawing
bills upon London, and when they became due, paying them by
other draughts upon the fame place with accumulated interefl and
commiffion. But though they had been able by this method to
raife money as faft as they wanted it; yet inftead of making a
profit, they mufl have fuffered a lofs by every fuch operation; fb
that in the long-run they mufl have ruined themfelves as a mer-
cantile company, though, perhaps, not fo foon as by the more
expenfive pra(^ice of drawing and re- drawing. They could flill

have

THE WEALTH OF NATIONS.

have made nothing by the intereft of the paper, which, being over C
and above what the circulation of the country could abforb and l-
employ, returned upon them, in order to be exchanged for gold
and filver, as faft as they ifllied it 3 and for the payment of which
they were themfelves continually obliged to borrow money. On
the contrary, the whole expence of this borrowing, of employing
agents to look out for people who had money to lend, of nego^
eiating with thofe people, and of drawing the proper bond or affign-
ment, muft have fallen upon them, and have been fo much clear
lofs upon the balance of their accounts. The proje£l of replenifli-
ing their coffers in this manner may be compared to that of a man
who had a water-pond from which a ftream was continually
running out, and into which no ftream was continually running,
but who propofed to keep it always equally full by employing a
number of people to go continually with buckets to a well at fome
miles diftance in order to bring water to replenifn it.

But though this operation had proved, not only pra6licable,
but profitable to the bank as a mercantile company; yet the
country could have derived no benefit from it; but, on the con-
trary, muft have fuffered a very confiderable lofs by it. This ope-
ration could not augment in the fm all eft degree the quantity of
money to be lent. It could only have ere6led this bank into
a fort of general loan office for the whole country. Thofe
who wanted to borrow, mnft have applied to this bank, inftead of
applying to the private perfons who had lent it their money. But
a bank which lends money, perhaps, to five hundred different'
people, the greater part of whom its directors can know very little
about, is not likely to be more judicious in the choice of its
debtors, than a private perfon who lends out his money among
a few people whom he knows, and in whofe fober and frugal
condu6l he thinks he has good reafon to confide. The debtors
of fuch a bank, as that whofe condu6l I have been giving fomc

account

THE NATURE AND CAUSES OF

K account of, were likely, the greater part of them, to be chime-
rical projectors, the drawers and re-drawers of circulating bills
of exchange, who would employ the money in extravagant under-
takings, which, with all the afTiftance that could be given them,
they would probably never be able to complete, and which, if
they fhould be compleated, would never repay the expence which
they had really coft, would never afford a fund capable of main-
taining a quantity of labour equal to that which had been em-
ployed about them. The fober and frugal debtors of private
perfons, on the contrary, would be more likely to employ the
money borrowed in fober undertakings which were proportioned
to their capitals, and which, though they might have lefs of
the grand and the marvellous, would have more of the folid
and the profitable, which would repay with a large profit what-
ever had been laid out upon them, and which would thus afford
a fund capable of maintaining a much greater quantity of labour
than that which had been employed about them. The fuccefs
of this operation, therefore, without encreafmg in the fmalleft
degree the capital of the country, would only have transferred a
great part of it from prudent and profitable, to imprudent and
unprofitable undertakings.

That the induflry of Scotland languifhed for want of money
to employ it, was the opinion of the famous Mr. Law. By efta-
blifhing a bank of a particular kind, which, he feems to have
imagined, might ifTue paper to the amount of the whole value
of all the lands in the country, he propofed to remedy this want of
money. The parliament of Scotland, when he firil propofed his
project, did not think proper to adopt it. It was afterwards
adopted, with fome variations, by the duke of Orleans, at that
time regent of France. The idea of the pofTibility of multiplying
paper money to almofl any extent, was the real foundation of what
is called the Miffiflippi fcheme, the moft extravagant project both

THE WEALTH OF NATIONS.

of banking and ftock-jobbing that, perhaps, the world ever faw. CHAP.
The different operations of this fcheme are explained fo fully, fo u—
clearly, and with fo much order and diftindnefs, by Mr. Du.
V.erney, in his Examination of the Political Refle6lions upon
Commerce and Finances of Mr. Du Tot, that I fliall not give
any account of them. The principles upon which it was founded
are explained by Mr. Law himfelf, in a difcourfe concerning money
and trade, which he publiflied in Scotland when he firft propofed
his proje6l. The fplendid, but vifionary ideas which are fet forth
in that and fome other works upon the fame principles, ftill con-
tinue to make an impreffion upon many people, and have, perhaps,
m part, contributed to that excefs of banking, which has of late
been complained of both in Scotland and in other places.

The bank of England is the greateft bank of circulation in
Europe. It was incorporated, in purfuance of an a6l of parlia-
ment, by a charter under the great feal, dated the 27th July, 1694.
It at that time advanced to government the fum of one million two
hundred thoufand pounds, for an annuity of one hundred thou-
fand pounds ; or for 96,000 1. a year intereft, at the rate of eight
percent., and 4000 1. a year for the expenceof management. The
credit of the new government, eftablifhed by the revolution, we
may believe, muft have been very low, when it was obliged to
borrow at fo high an intereft.

In 1 697 the bank was allowed to enlarge its capital flock by an
engraftment of 1,001,1711. 10 s. Its whole capital flock, there-
fore, amounted at this time to 2,201, 171 1. 10 s. This engraft-
ment is faid to have been for the fupport of publick credit. In 1 696
tallies had been at forty, and fifty, and fixty per cent, difcount,
and bank notes at twenty per cent.*. During the great recoinage of
the filver, which was going on at this time, the bank had thought
proper to difcontinue the payment of its notes, which necefTarily
occafioned their difcredit.

* James Poftlethwaite's Hiftory of the Publick Revenue, page 301.

Vol. I. 3D In

THE NATURE AND CAUSES OF

In purfuance of the yth Anne, c. vii. the bank advanced and
paid into the exchequer, the fum of 400,000!.; making in
all the fum of 1,600,000 1. which it liad advanced upon its
original annuity of 96,000!. intereft and 4000 1. for expence of
management. In 1708, therefore, the credit of government was as
good as that of private perfons, fince it could borrow at fix per
cent, intereft, the common legal and market rate of thofe times. In
purfuance of the fame a6l, the bank cancelled exchequer bills to
the amount of 1,775,027 1. 17 s. 10 4- d. at fix per cent, intereft,
and was at the fame time allowed to take in fubfcriptions for
doubling its capital. In 1708, therefore, the capital of the bank
amounted to 4,402,343!.; and it had advanced to government
the fum of 3,375,027 1. 17 s. 10 -id.

By a call of fifteen per cent, in 1709, there was paid in and
made ftock 656,204!. is. 9d. ; and by another of ten per cent,
in 17 10, 501,4481. I2S. iid. In confequence of thofe two
calls, therefore, the bank capital amounted to 5>559>995 1. 14 s. 8 d.

In purfuance of the 8th George I. c. xxi. the bank purchafed
of the South Sea Company, ftock to the amount of 4,000,000.!. ^
and in 1722, in confequence of the fubfcriptions which it had
taken in for enabling it to make this purchafe, its capital ftock was
increafed by 3,400,000!. At this time, therefore, the bank had
advanced to the publick 9,375,027!. 17 s. 104-d. ; and its capital
ftock amounted only to 8,959,995!. 14 s. 8d. It was upon this
occafion that the fum which the bank had advanced to the publick,
and for which it received intereft, began firft to exceed its capital ftock,
or the fum for which it paid a dividend to the proprietors of bank
ftock ; or, in other words, that the bank began to have an undi-
vided capital, over and above its divided one. It has continued to-
have an undivided capital of the fame kind ever fmce. In 1746
the bank had, upon different occafions, advanced to the pub-

lick

THE WEALTH OF NATIONS.

Ikk 1 1 ,68 6,800 1, and its divided capital had been raifed by different C HA P.
tails and fubfcriptions to 10,780,000!. The ftate of thofe two \— j
fams has continued to be the fame ever fince. In purfuance of the
4th of George III. c. 25. the bank agreed to pay to government for
the renevral of its charter, 1 10,000 1. without interefl or repayment.
This fum, therefore, did not increafe either of thofe two other fums.

The dividend of the bank has varied according to the variations
in the rate of the intereft which it has, at different times, received
-for the money it had advanced to the publick, as well as according
to other circumftances. This rate of intereft has gradually
been reduced from eight to three per cent. For fome years
jpaft the bank dividend has been at five and a half per cent.

The {lability of the bank of England is equal to that of the
Britifh government. All that it has advanced to the publick mufl
ie lofl before its creditors can fuflain any lofs. No other
banking company in England can be eftabliflied by a6l of parlia-
ment, or can confifl of more than fix members. It afls, not only
las an ordinary bank, but as a great engine of ftate. It receives and
pays the greater part of the annuities which are due to the creditors
of the publick, it circulates exchequer bills, and it advances to
government the annual amount of the land and malt taxes, which
are frequently not paid up till fome years thereafter. In thofe dif-
ferent operations, its duty to the publick may fometimes have
obliged it, without any fault of its directors, to overflock the cir-
<:ulation with paper money. It likewife difcounts merchants bills,
and has, upon feveral different occafions, fupported the credit of the
principal houfes, not only of England, but of Hamburgh and
Holland. Upon one occafion it is faid to have advanced for this pur-
pofe, in one week, about 1,600,006 1. ; a great part of it in bullion.
I do not, however, pretend to warrant either the greatnefs of the
fum, or the fhortnefs of the lime. Upon other occafions, this great
company has been reduced to the necefTity of paying in fixpences.

3 D 2 It

388

THE NATURE AND CAUSES OF

BOOK t^^X jis not by augmenting the capital of the country, but by
V- — rendering a greater part of that capital a6live and productive
than would otherwife be fo, that the mofl judicious operations
of banking can increafe the induftry of the country. That part
of his capital which a dealer is obliged to keep by him unem-
ployed, and in ready money for anfwering occafional demands,,
is fo much dead flock, which, fo long as it remains in this fitu-
ation, produces nothing either to him or to his country. The
judicious operations of banking, enable him to convert this dead
ftock into aftive and productive ftock ; into materials to work
upon, into tools to work with, and into provilions and fub-
fiftence to work for ; into ftock which produces fomething both
to him and to his country. The gold and filver money which
circulates in any countiy, and by means of which,, the produce
of its land and labour is annually circulated and diftributed to
the proper confumers, is, in the fame manner as the ready money
of the dealer, all dead ftock. It is a very valuable part of the
capital of the country, which produces nothing to the country.
The judicious operations of banking, by fubftituting paper in the
room of a great part of this gold and filver, enables the country
to convert a great part of this dead ftock into a6live and produc-
tive ftock; into ftock which produces fomething to the country.
The gold and filvcr money which circulates in any country
may very properly be compared to a highway, which, while it
circulates and carries to market all the grafs and corn of the
country, produces itfelf not a fmgle pile of either. The judi-
cious operations of banking, by providing, if I may be allowed
fo violent a metaphor, a fort of waggon- way through the air;
enable the country to convert, as. it were, a great part of its
highways into good paftures and corn fields, and thereby to in-
creafe very confiderably the annual produce of its land and labour.
The commerce and induftry of the country, however, it muft be
acknowledged, though they may be fomewhat augmented, cannot

be:

'^THE WEALTH OF NATIONS.

he altogether fo fecure, when they are thus, as it were, fufpendcd ^ ^-

upon the Daedalian wings of paper money, as when they travel v-—

about upon the folid ground of gold and filver. Over and above

the accidents to which they are expofed from the unfkilfulnefs of

the condu6lors of this paper money, they are liable to feveral others,

from which no prudence or (kill of thofe conductors can guard

them.

An unfuccefsful war, for example, in which the enemy got
pofTeffion of the capital, and confequently of that treafure which
fupported the credit of the paper money, would occafion a much
greater confufion in a country where the whole circulation was
carried on by paper, than in one where the greater part of it was
carried on by gold and filver. The ufual inftrument of commerce
having loft its value, no exchanges could be made but either by
barter or upon credit. All taxes having been ufually paid in paper
money, the prince would not have wherewithal either to pay his
troops, or to furnifh his magazines ; and the ftate of the country
would be much more irretrievable than if the greater part of its
circulation had confifted in gold and filver. A prince, anxious to
maintain his dominions at all times in the ftate in v/hich he can
moft eafily defend them, cmght, upon tfiis account, to guard, not
only againil that excefiive multiplication of paper money which
ruins the very banks which ilTue it ; but even againft that multi-
plication of it, which enables them to fill the greater part of the.
circulation of the country with it.

The circulation of every country may be confidcred as divided
into two different branches j the circulation of the dealers with one
another, and the circulation between the dealers and the confumers.
Though the fame pieces of money, whether paper or metal, may
be employed fometimes in the one circulation and fometimes in the
other, yet as both are conftantly going on at the fame time, each

rec^uires

^^o THE NATURE AND CAUSES OF

B O O fC requires a certain ftock of money of one kind or another, to carry
c^-y^^^u it on. The value of the goods circulated between the different
dealers, never can exceed the value of thofe circulated between the
dealers and the confumers j whatever is bought by the dealers,
being ultimately deftined to be fold to the confumers. The circu-
lation between the dealers, aS it is carried on by wholefale, requires
generally a pretty large fum for every particular tranfa6lion. That
between the dealers and the confumers, on the contrary, as it is
generally carried on by retail, frequently requires but very fmall
ones, a (hilling, or even a halfpenny, being often fufficient. But
fmall fums circulate much fafter than large ones. A Shilling changes
mafters more frequently than a guinea, and a halfpenny more
frequently than a fhilling. Though the anmial purchafes of all
the confumers, therefore, are at leaft equal in value t-o thofe of all
the dealers, they can generally be tranfaded with a much fmaller
quantity of money ; the fame pieces, by a more rapid circulation,
ferving as the inftrument of many more purchafes of the otie kind
than of the other.

Paper money may be fo regulated, a$ either to confine itfelf
Tery much to the circulation between the different dealers, or to
extend itfelf like wife to a great part of that between the dealers
and the confumers. Where no bank notes are circulated under ten
pounds value, as in London, paper money confines itfelf very much
to the circulation between the dealers. When a ten pound bank
note comes into the hands of a confumer, he is generally obliged to
change it at the firfl fliop where he has occafion to purchafe five
fhillings worth of goods, fo that it often returns into the hands of
a dealer, before the confumer has fpent the fortieth part of the
money. Where bank notes are iffued for fo fmall films as twenty
jhillings, as in Scotland, paper money extends itfelf to a confiderable
part of the circulation between dealers and confumers. Before the
A^t of parliament, which put a flop to the circulation of ten and

4 five

THE WEALTH OF NATIONS

five (hilling notes, it filled a ftill greater part of that circulation.
In the currencies of North America, paper was commonly iffued
for fo fmall a fum as a fhilling, and filled almofl the whole of
that circulation. In fome paper currencies of Yorklhire, it was
ifiued even for fo fmall a fum as a fixpence.

Where the iffuing of bank notes for fuch veiy fmall fums is
allowed and commonly pra6lifed, many mean people are both
enabled and encouraged to become bankers. A perfon whofe pro-
milfory note for five pounds, or even for twenty fhillings, would
be rejefted by every body, will get it to be received without fcruple
when it i^ iffued for fo fmall a fUm as a fixpence. But the frequent
bankruptcies to which fuch beggarly bankers mufl be liable, may
occafion a very confid^rable inconvenie-ncy, and fometimes even a
very great calamity to many poor people who had received their
notes in payment.

It were better, perhaps, that no bank notes were iffued in any
part of the kingdom for a fmallei" fum than five pounds. Paper
money would then, probably, confine itfelf, in every part of the
kingdom, to the circulation between the different dealers, as much
as it does at prefent in London, where no bank notes are iffued
under ten pounds value ; five pounds being, in mofl: parts of the
kingdom', a fiim which, though it will purchafe, perhaps, little
more than half the quantity of goods, is as much confidered, and
is as feldom fpent all at once, as ten pounds are amidfl the profufe
expence of London.

Where paper money, it is to be obferved, is pretty much con-
fined to the circulation between dealers and dealers, as at London,
there is always plenty of gold and filver. Where it extends itfelf to
a confiderable part of the circulation between dealers and confumers.

THE NATURE AND CAUSES OF

as in Scotland, and ftill more in North America, it baniflies gold
and filver almofl entirely from the country ; almoft all the ordinary
tranfadlions of its interior commerce being thus carried on by
paper. The fuppreflion of ten and five fhiUing bank notes, fome-
what relieved the fcarcity of gold and filver in Scotland ; and the
fupprefTion of twenty fliilling notes, would probably relieve it ftill
more. Thofe metals are faid to have become more abundant in
America, fmce the fuppreffion of fome of their paper currencies.
They are faid, likewife,. to have been more abundant before the
inftitution of thofe currencies.

Though paper money fhould be pretty much confined to the
circulation between dealers and dealers, yet banks and bankers
might ftill be abie to give nearly the fame affiftance to the induftry
and commerce of the country, as they had done when paper money
filled almoft the whole circulation. The ready money which a dealer
is obliged to keep by him, for anfwering occafional demands, is
deftined altogether for the circulation between himfelf and other
dealers, of whom he buys goods. He has no occafion to keep
any by him for the circulation between himfelf and the confumers,
who are his cuftomers, and who bring ready money to him, inftead
of taking any from him. Though no paper money, therefore, was
allowed to be iftued, but for fuch fums as would confine it pretty
much to the circulation between dealers and dealers ; yet partly by
difcounting real bills of exchange, and partly by lending upon
cafti accounts, banks and bankers might ftill be able to relieve
the greater part of thofe dealers from the neceffity of keeping any
confiderable part of their ftock by them, unemployed and in ready
money, for anfwering occafional demands. They might ftill be
able to give the utmoft affiftance which banks and bankers can^,
tfith propriety, give to traders of every kind.

THE WEALTH OF NATIONS.

393

To reftraln private people, it may be faidj from receiving in C H^A P.
payment the promiflary notes of a banker, for any fum whether v.— v^*— j
great or fmall, when they themfelves are willing to receive them ; or,
to reftrain a banker from ilTuing fuch notes, when all his neighbours
are willing to accept of them, is a manifeft violation of that natural
liberty which it is the proper bufinefs of law, not to infringe, but to
fupport. Such regulations may, no doubt, be confidered as in
fome refpe6l a violation of natural liberty. But thofe exertions of
the natural liberty of a few individuals, which might endanger the
fecurity of the whole fociety, are, and ought to be, retrained by
the laws of all governments of the moft free, as well as of the
moft defpotical. The obligation of building party walls, in order
to prevent the communication of lire, is a violation of natural
liberty, exaftly of the fame kind with the regulations of the banking
trade which are here propofed,

A PAPER money conlifting in bank notes, iflued by people of
undoubted credit, payable upon demand without any condition, and
in fa6l always readily paid as foon as prefented, is, in every
refpeft, equal in value to gold and filver money j fmce gold and
filver money can at any time be had for it. Whatever is either
bought or fold for fuch paper, muft neceffarily be bought or fold
as cheap as it could have been for gold and filver.

The increafe of paper money, it has been faid, by augmenting
the quantity, and confequently diaiiaifliing the value of the whole
currency, neceffarily augments th,e money price of commodities.
-But as the quantity of gold and filver, wlii'ch is taken from the
currency, is always equal to the quantity of paper which is added
to it, paper n^oney does not aecelTarily increafe the quantity of the
whole cuiTency, From the beginning of. the laft century to the
pi:efent tim^s, pro.viiiQUS never were cheaper in Scotland than in
Vol. I. 3 E 1759,

394

THE NATURE AND CAUSES OF

BOOK 1759, though, from the circulation of ten and five (hilling bank
c^-'v^-j notes, there was then more paper money in the country than at
prefent. The proportion between the price of provifions in Scot-
land and that in England, is the fame now as before the great
multiplication of banking companies in Scotland. Corn is, upon
moft occafions, fully as cheap in England as in France though
there is a great deal of paper money in England, and fcarce any in
France. In 1751 and in 1752, when Mr. Hume pubhfhed his
Political difcourfes, and foon after the great multiplication of
paper money in Scotland, there was a very fenfible rife in the price
of provifions, owing, probably, to the badnefs of the feafons, and
not to the multiplication of paper money.

It would be otherwife, indeed, with a paper money confifting
in promiflary notes, of which the immediate payment depended,
in any refpedl, either upon the good will of thofe who ilTued them ;
or upon a condition which the holder of the notes might not always
have it in his power to fulfil , or of which the payment was not
exigible till after a certain number of years, and which in the mean-
time bore no intereft. Such a paper money would, no doubt, fall
more or lefs below the value of gold and filver, according as the
difficulty or uncertainty of obtaining immediate payment was
fuppofed to be greater or lefs ; or according to the greater or lef»-,
diftance of time at which payment was exigible, .

Some years ago the different banking companies of Scotland
were in the pra61:ice of inferting into their bank notes, what they
called an Optional Claufe, by which they promifed payment to the
bearer, either as foon as the note fhould be prefented, or, in the
option of the dire6lors, fix months after fuch prefentment, together
with the legal interefl for the faid fix months. The directors of
fome of thofe banks fometimes took advantage of this optional
4 _ claufe.

THE WEALTH OF NATIONS.

395

claufe, and fometimes threatened thofe who demanded gold and C HA P.
filver in exchange for a confiderable number of their notes, that ^--H
they would take advantage of it, unlefs fuch demanders would
content themfelves with a part of what they demanded. The
promiffary notes of thofe banking companies conftituted at that
time the far greater part of the currency of Scotland, which this
uncertainty of payment neceflarily degraded below the value of
gold and filver money. During the continuance of this abufe,
(which prevailed chiefly in 1762, 1763, and 1764), while the ex-
change between London and Carlifle was at par, that between
London and Dumfries would fometimes be four per cent, againft
Dumfries, though this town is not thirty miles diftant from
Carlifle. But at Carlifle, bills were paid in gold and filver ; whereas
at Dumfries they were paid in Scotch bank notes, and the uncer-
tainty of getting thofe bank notes exchanged for gold and filver
coin had thus degraded them four per cent, below the value of that
coin. The fame a6l of parliament which fupprefled ten and five
(hilling bank notes, fuppreffed likewife this optional claufe, and
thereby reflored the exchange between England and Scotland to its
natural rate, or to what the courfe of trade and remittances might
happen to make it.

In the paper currencies of Yorkfhire, the payment of fo fmall a
fum as a fixpence fometimes depended upon the condition that the
holder of the note fliould bring the change of a guinea to the perfon
who iifued it j a condition, which the holders of fuch notes might
frequently find it very difficult to fulfil, and which mufl have degraded
this currency below the value of gold and filver money. An act of
parliament, accordingly, declared all fuch claufes unlawful, and
fuppreffed, in the fame manner as in Scotland, all promiffary notes,
payable to the bearer, under twenty fliillings value,

3 E 2

The

THE NATURE AND CAUSES OF

BOOK The paper curiencies of North America confifted, not in bank
^..-'v-^ notes payable to the bearer on demand, but in a government paper,
of which the payment was not exigible till feveral years after it v/as
iflued : And though the colony governments paid no intereft to the
holders of this paper, they declared it to be, and in faft rendered
it, a legal tender of payment for the full value for which it was
iffued. But allowing the colony fecurity to be perfe61Iy good, a
hundred pounds payable fifteen years hence, for example, in a
country where intereft is at fix per cent, is worth little more than
forty pounds ready money. To obHge a creditor, therefore, to accept
of this as full payment for a debt of a hundred pounds aftually paid
down in ready money, was an a6l of fuch violent injuftice, as has
fcarce, perhaps, been attempted by the government of any other
country which pretended to be free. It bears the evident marks of
having originally been, what the honeft and downright Doctor
Douglafs aflures us it was, a fcheme of fraudulent debtors to cheat
their creditors. The government of Penfylvania, indeed, pretended,
upon their firft emiflion of paper money in 1722, to render their
paper of equal value with gold and filver, by ena6ling penalties-
againft all thofe who made any difference in the price of their goods
when they fold them for a colony paper, and when they fold them for
gold and filver ; a regulation equally tyrannical, but much lefs
effe6lual than that which it was meant to fupport. A pofitive law
may render a fhilling a legal tender for a guinea ; becaufe it may
direct the courts of jufiice to difcliarge the debtor who has made
that tender. But no pofitive law can oblige a perfon who fells gcodsj^
and who is at liberty to fell or not to fell, as he pleafes, to accept
of a fhilling as equivalent to a guinea in the price of them. Not-
withftanding any regulation of this kind, it appeared by the courfe
of exchange with Great Britain, that a hundred pounds flerling
was occafionally confidercd as equivalent, in fome of the colonies,,
to a hundred and thirty pounds, and in otliers to fo great a fum as

eleven

THE WEALTH OF NATIONS. 39;

eleven hundred pounds currency this difference in the value CHAP,

arifing from the difference in the quantity of paper emitted u—y-^
in the different colonies, and in the diftance and probability
of the term of its final difcharge and rederhption.

No law, therefore, could be more equitable than the a6l of par-
liament, fo unjuftly complained of in the colonies, which declared
that no paper currency to be emitted there in time coming, fliould
be a legal tender of payment.

Pensylvania was always more moderate in its emiffions of
paper money than any other of our colonies. Its paper currency
accordingly is faid never to have fijnk below the value of the gold and
filver which was current in the colony before the firft erniffion of its
paper money. Before that emiffion, the colony had raifed the de-
nomination of its coin, and had, by. a6l of affembly, ordered five
fhillings flerling to pafs in the colony for fix and three-
pence, and afterwards for fix and eight-pence. A pound colony
currency, therefore, even when that currency was gold and
filver, was more than thirty per cent, below the value of a pound
fteiiing; and when that currency was turned into paper, it was
feldom much more than thirty per cent, below that value. The
pretence for raifing the denomination of the coin, was to prevent
the exportation of gold and filver, by making equal quantities of thofe
metals pafs for greater fums in the colony than they did in the mother
country. It was found, however, that the price of all goods from
the mother country rofe exa6lly in proportion as they raifed the
denomination of their coin, fo that their gold and filver were exported
as fafl as ever.

The paper of each colony being received in the payment of the
provincial taxes, for the full value for which it had been iffued.

THE NATURE AND CAUSES OF

^ it neceflarily derived from this ufe fome additional value, over and
'J above w^hat it would have had, from the real or fuppofed diftance
of the term of its final difcharge and redemption. This additional
value was greater or lefs, according as the quantity of paper iffued
was more or lefs above what could be employed in the payment of
the taxes of the particular colony which iffued it. It was in all the
colonies very much above what could be employed in this manner.

A PRINCE, who (hould ena6l that a certain proportion of his
taxes fhould be paid in a paper money of a certain kind, might
thereby give a certain value to this paper money ; even though the
term of its final difcharge and redemption fhould depend altogether
upon the will of the prince. If the bank which iffued this paper was
careful to keep the quantity of it always fomewhat below what could
eafily be employed in this manner, the demand for it might be fuch as
to make it even bear a premium, or fell for fomewhat more in the
market than the quantity of gold or filver currency for which it was
iffued. Some people account in this manner for what is called the
Agio of the bank of Amfterdam, or for the fuperiority of bank
money over current money though this bank money, as they
pretend, cannot be taken out of the bank at the will of the owner.
The greater part of foreign bills of exchange muft be paid in bank
money, that is, by a transfer in the books of the bank ; and the
directors of the bank, they alledge, are careful to keep the whole
quantity of bank money always below what this ufe occafions a
demand for. It is upon this account, they fay, that bank money
fells for a premium, or bears an agio of four or five per cent,
above the fame nominal fum of the gold and filver currency of the
country. This account of the bank of Amfterdam, however, I
ihave reafon to believe, is altogether chimerical.

A PAPER

THE WEALTH OF NATIONS. 39?

A PAPER currency which falls below the value of gold and CHAP*
filver coin, does not thereby fink the value of gold and filver, u— -v-— «4
or occafion equal quantities of thofe metals to exchange for
a fmaller quantity of goods of any other kind. The propor-
tion between the value of gold and filver and that of goods
of any other kind, depends in all cafes, not upon the nature
or quantity of any particular paper money, which may be current
in any particular country, but upon the richnefs or poverty of
the mines, which happen at any particular time to fupply the
great market of the commercial world with thofe metals. It
depends upon the proportion between the quantity of labour
which is necefTary in order to bring a certain quantity of
gold and filver to market, and that which is neceffary* in-,
order to bring thither a certain quantity of any other fort of.
goods..

If bankers are reftrained from ilTuing any circulating bank
notes, or notes payable to the bearer, for lefs than a certain
fum ; and if they are fubjedled to the obligation of an im-
mediate and unconditional payment of fuch bank notes as
foon as prefented, their trade may, with fafety to the publick,
be rendered in all other refpe6ts perfeflly free. The late
multiplication of banking companies in both parts of the
united kingdom, an event by which many people have been
much alarmed, inftead of diminilhing, increafes the fecurity
of the publick. It obliges all of them to be more circum-
fpe£l in their condu6l, and, by not extending their currency
beyond its due proportion to their cafh, to guard themfelves
againft thofe malicious runs, which the rivalfhip of fo many
competitors is always ready to bring upon them. It reftrains
the circulation of each particular company within a narrower
circle, and reduces their circulating notes, to a fmaller number^.

■ By-

400

THE NATURE AND CAUSES OF

BOOK By dividing the whole circulation into a greater number of
parts, the failure of any one company, an accident which, in
the courfe of things, muft fometimes happen, becomes of lefs
confequence to the publick. This free competition too obliges
all bankers to be more liberal in their dealings with their
cuftomers, left their rivals fliould carry them away. In
general, if any branch of trade, or any divifion of labour, be
advantageous to the publick, the freer and more general the
competition, it will always be the more fo.

CHAP. III.

Of the Accuf?2ulation of Capitaly or of produ5iive and unpro'

du5iive Labour^

THERE is one fort of labour which adds to the value of the
fubje6l upon which it is beftowed : There is another which
has no fuch eiTe6l. The former, as it produces a value, may be
called productive; the latter unprodu6live * labour. Thus the
labour of a manufacturer adds generally to the value of the materials
which he works upon, that of his own maintenance, and of hi§
mafter's profit. 1 he labour of a menial fervant, on the contrary,
adds to the value of nothing. Though the manufa6lurer has his
wages advanced to him by his mafter, he, in reahty, cofts him no
expence, the value of thofe wages being generally reftored, together
with a profit, in the improved value of the fubjeft upon which his
labour is beftowed. But the maintenance of a menial fervant never
is reft:ored. A man grows rich by employing a multitude of ma-
nufacturers : He grov/s poor, by maintaining a multitude of
menial feryants. The labour of the latter, hov/ever, has its value,

* Some French authors of great learning and ingenuity have ufcd thofe words in a
different fenfe. In the lafi: chapter of the fourth boolc, I lhall endeavour to (how that
their fenfe is an improper one,

and

THE WEALTH OF NATIONS.

401

;and deferves its reward as well as that of the former. But the labour of C H^A P.
the manufa6lurer fixes and realizes itfelf in fome particular fubje6l or t--v-^-»
vendible commodity, which lafts for fome time at leaft after
that labour is paft. It is, as it were, a certain quantity of labour
Hocked and ftored up to be employed, if neceflary, upon fome other
occafion. That fubje61:, or what is the fame thing, the price of
that fabjeSl, can afterwards, if neccffary, put into motion a quan-
tity of labour equal to that which had originally produced it. The
labour of the menial fervant, on the contrary, does not fix or
reahze itfelf in any particular fubjedt or vendible commodity. His
fervices generally perifh in the very inftant of their performance,
and feldom leave any trace or value behind them, for which an
€qual quantity of fervice could afterwards be procured.

The labour of fome of the moft refpe6lable orders in the fociety
is, like that of menial fervants, unprodu6tive of any value, and does
not fix or realize itfelf in any permanent fubje6l, or vendible
commodity, which endures after that labour is paft, and for
which an equal quantity of labour could afterwards be procured.
The fovereign, for example, with all the officers both of juflice
and war who ferve under him, the whole army and navy, are
\inprodu6live labourers. They are the fervants of the publick,
and are maintained by a part of the annual produce of the induftry
of other people. Their fervice, how honourable, how ufeful, or
how neceffary foever, produces nothing for which an equal quantity
of fervice can afterwards be procured. The proteflicii, fecurity^
and defence of the commonwealth, the f"fFe6l of their labour this
year, will not purchafe its protection, fecurity, and defence, for
the year to come. In the fame clafs muft be ranked, fome
both of the graveft and moft important, and fome of the moft
frivolous profefTions : churchmen, lawyers, phyficians, men
of letters of all kinds ; players, buffoons, muficians, opera-

VoL. I. 3 F fingers*

402

THE NATURE AND CAUSES OF

op K fingers, opera-dancers, &c. The labour of the meaneft of thef^
— v--*^ has a certain value, regulated by the very fame principles which
regulate that of every other fort of labour and that of the noblefl
and nioft ufeful, produces nothing which could afterwards pur-
chafe or procure an equal quantity of labour. Like the decla-
mation of the aclor, the harangue of the orator, or the tune of
the mufician, the work of all of them periflies in the very inflant
of its production.

Both produ6live and unproduftive labourers, and thofe who-
do not labour at all, are all equally maintained by the annual pro-
duce of the land and labour of the country. This produce, how
great foever, can never be infinite, but muft have certain limits..
According, therefore, as a fmaller or greater proportion of it is in
any one year employed in maintaining unprodudtive hands, the
more in the one cafe and the lefs in the other will remain for the-
produ6live, and the next yeai-'s produce will be greater or fmaller
accordingly; the whole annual produce, if we except the fponta-
neous productions of tlie earth, being the efFe<^ of produOive la-
bour.

Though the whole annual produce of the land and labour of
every country, is, no doubt, ultimately deftined for fupplying the
confumption of its inhabitants, and for procuring a revenue to tliem ;
yet when it firft comes either from the ground, or from the hands
of the productive labourers, it naturally divides itfelf into two
parts. One of them, and frequently the largeft, is, in the firft
place, deftined for replacing a capital, or for renewing the pro-
vifions, materials, and finifiied work, which had been withdrawn
from a capital; the other for conilituting a revenue either to the
owner of this capital, as the profit of his flock ; or to fome other
perfon, as the rent of his land. Thus, of the produce of land,

one

rliE WEALTH OF NATIONS, 40

one part replaces the capital of the farmer; the other pays his CH AP,
profit and the rent of the landlord ; and thus conftitutes a revenue v-^-v-^
both to the owner of this capital, as the profits of his flock ; and
to fome other perfon, as the rent of his land. Of the produce of
a great manufa6lure, in the fame manner, one part, and that
always tlie largefl, replaces the capital of the undertaker of the
work; the other pays his profit, and thus conflitutes a revenue to
the owner of this capital.

That part of the annual produce of the land and labour of any
country which replaces a capital, never is immediately employed
to maintain any but produ6live hands. It pays the wages of pro-
daflive labour only. That v/hich is immediately deftined for con-
ftituting a revenue either as profit or as rent, may maintain in-^"
differently either productive or unproductive hands.

Whatever part of his flock a man employs as a capital, ke
always expe6ts is to be replaced to him with a profit. He employs
it, therefore, in maintaining produ6tive hands only ; and after
having ferved in the function of a capital to him, it conflitutes
a revenue to them. Whenever he employs any part of it in main-
taining unprodu6tive hands of any kind, that part is, from that
moment, withdrawn from his capital, and placed in his fcock re-
ferved for immediate confumption.

Unproductive labourers, and thofe who do not labour at all,
a;*e all maintained by revenue; either, firfl, by that part of the
annual produce which is originally defcined for conflituting a re-
venue to fome particular perfons, either as the rent of land or as
the profits of flock; or, fecondly, by that part v/hich, though
originally deftined for replacing a capital and for maintaining pro-
du^ive labourers only, yet when it comes into their hands, what-

3 F 2 ever

THE NATURE AND CAUSES OF

ever part of it is over and above their neceffary fubfiftence, may^
be employed in maintaining indifferently either produdive or un-
procUictiye hands. I hus, not only the great landlord or the rich,
merchant, but even the common workman, if his wages are con-»
fiderable, may maintain a menial fervant; or he may fometimes
go to a play or a puppet- fhovv, and fo contribute his ihare towards
maintainiiig one fet of unproductive labourers; or he may pay
fome taxes, and thus help to maintain another fet, more honour-
able and ufeful, indeed, but equally unprodu6live. No part of
the annual produce, however, which had been originally deftined.
to replace a capital, is ever directed towards maintaining unpro--
duclive hands, till after it has put into motion its full, comple-*
ment of produ(51:ive labour, or all that it could put into motioa
in the way in which it was employed. The workman muft. have
earned his wages by work done, before he can employ any part of
them in this manner. That part too is generally but a fmall one.
It is his Ipare revenue only, of which produiSlive labourers have
feldom a great deal. They generally have fome, however; and
in the payment of taxes the greatnefs of their number may com-
penfate, in fome meafure, the fmallnefs of their contribution.
The rent of land and the profits of ftock are every where, there-
fore, the principal fources from which unprodu6tive hands derive
their fubfiftence. Thefe are the two forts of revenue of which the
owners have generally moft to fpare. They might both maintain,
indifferently either produ6tive or unproductive hands. They feem,
however, to have fome predilection for the latter. The expence of
a great lord feeds generally more idle than induftrious people.
The rich merchant, though with his capital he maintains indu-
ftrious people only, yet by his expence, that is, by the employ-
ment of his revenue, he feeds commonly the very fame fort as the
great lord.

The

THE WEALTH OF NATIONS. 405

The proportion, therefore, between the proclu6live and unpro- ^^jfj^*
dliftive hands, depends very much in every country upon the pro- '
portion between that part of the annual produce, which, as foon
as it comes either from the ground or from the hands of the pro-
ductive labourers, is deftined for replacing a capital, and that which
is deftined for conftituting a revenue, either as rent, or as profit.
This proportion is very different in rich from what it is in poor
countries.

Thus, at prefent,.in the opulent countries of Europe, a very large,,
frequently the largeft portion of the produce of theland, is deftined for
replacing the capital of the rich and independant farmer; the other
for paying his profits, and the rent of the landlord. But antiently,
during the prevalency of the feudal government, a very fmall portion
of the produce was fufficient to replace the capital employed in cul-
tivation. It confifted commonly in a few wretched cattle, main-
tained altogether by the fpontaneous produce of uncultivated land, -
and which might, therefore, be confidered as a part of that fponta-
neous produce. It generally too belonged to the landlord, and was
by him advanced to the occupiers of the land. All the reft of the
produce properly belonged to him too, either as rent for his land>.
or as profit upon this paultry capital. The occupies s of land were
generally bondmen, whofe perfons and effe6ts were equally his pro-
perty. Thofe who were not bondmen were tenants at will, and
though the rent which they paid was often nominally little more
than a quit- rent, it really amounted to the whole produce of the
land. Their lord could at all times command their labour in^
peace, and their fervice in war. Though they lived at a diftance
from liis houfe, they were equally dependant upon him as his re-
tainers who lived in it. But the whole produce of the land un-
doubtedly belongs to him, who can difpofe of the labour and fer- -
vice of all thofe whom it maintains. In the prefent ftate of .Europe, ,

the-

4o6

THE NATURE AND CAUSES OF

B O^O K the Oiare of the landlord feldom exceeds a thu'd, fometimes not a
-J fourth part of the whole produce of the land. The rent of land,
liowever, in all the improved parts of the country, has been tripled
and quadrupled fince thofe antient times j and this third or fourth
part of the annual produce is, it feems, three or four times greater
than the whole had been before. In the progrefs of improvement,
rent, though it increafes in proportion to the extent, diminiflies in
proportion to the produce of the land.

In the opulent countries of Europe, great capitals are at prefent
employed in trade and manufa5lures. In the ancient ftate, the
little trade that was ftirring, and the few homely and coarfe
manufaftures that were carried on, required but very fmall ca-
pitals. Thefe, however, muft have yielded very large profits. The
rate of intereft was no where lefs than ten per cent, and their
profits mud have been fufficient to afford this great interefl. At
prefent the rate of intereft, in the improved parts of Europe, is
no where higher than fix per cent, and in fome of the moft im-
proved it is fo low as four, three^ and two per cent. Though
that part of the revenue of the inhabitants which is derived from the
profits of flock is ahvays much greater in rich than in poor coun-
tries, it is becaufe the flock is much greater: in proportion to the
flock the profits are generally much lefs.

That part of the annual produce, therefore, which, as foon
as it comes either from the ground or from the hands of the pro-
du6live labourers, is defliii^jd for replacing a capital, is not only
much greater in rich than in poor countries, but bears a much
greater proportion to that whicli is immediately deflined for con-
flituting a revenue either as rent or as profit. The funds deflined
for the maintenance of produclive labour, are not only much
greater in the former than in the latter, but bear a much greater
7 proportion

THE WEALTH OF NATIONS. 40;

proportion to thofe which, though they may be employed to main- C H^A P.
tain either produ6tive or unprodu6live hands, have generally a w
predilection for the latter.

The proportion between thofe different funds necelTarily deter-
mines in every country the general chara(5ter of the inhabitants as
to induftry or idlenefs. We are more induflrious than our fore-
- fathers; becaufe in the prefent times the funds deftined for the
maintenance of induftry, are much greater in proportion to
thofe which are likely to be employed in the maintenance of
idlenefs, than they were two or three centuries ago. Our an-
ccftors were idle for want of a fuliicient encouragement to in-
duftry. It is better, fays the proverb, to play for nothing, than to-
work for nothing. In mercantile and manufafturing towns, where
the inferior ranks of people are chiefly maintained by the employ-
ment of capital, they are in general induflrious, fober, and thriv-
ing; as in many Englifh, and in mofl Dutch towns. In thofe
towns whicli are principally fupported by the conftant oroccafional
refidence of a court, and in which the inferior ranks of people are-
chiefly maintained by the fpending of revenue, they are in general
idle, difToIute, and poor; as at Rome, Verfailles, Compiegne,
and Fontainbleau. If you except Rouen and Bourdeaux, there is
little trade or induftry in any of the parliament towns of France;
and the inferior ranks of people being chiefly maintained by the
expence of the members of the courts of juftice, and of thofe who
come to plead before them, are in. general idle and poor. The
great trade of Rouen and Bourdeaux feems to be altogether the
effc6l of their fituation. Rouen is neceffarily the entrepot of al-
moil all the goods which are brought either from foreign coun-
tries, or from the maritime provinces of France, for the confump-
tion of the great city of Paris. Bourdeaux is in the fame manner
the entrepot of the wines which grow upon the banks of the Ga-
ronne, and of the rivers which run into it, one of the richefl- wine

countries

j.o8 THE NATURE AND CAUSES OF

BOOK countries in the world, and which feems to produce the wine
,u.-Y-l^ :fitteft for exportation, or beft fuited to the tafte of foreign nations.

Such advantageous fituations neceffarily attraft a great capital by
the great employment which they afford it ; and the employment
of this capital is the caufe of the induflry of thofe two cities. In
the other parliament towns of France, very little more capital feems
to be employed than what is necelTary for fupplying their own
(tonfumption J that is, little more than the fmalleft capital which can
be employed in them. The fame thing may be faid of Paris,
Madrid, and Vienna. Of thofe three cities, Paris is by far the
moft induftrious ; but Paris itfelf is the principal market of all the
manufaftures eftablifhed at Paris, and its own confumption is the
principal obje6l of all the trade which it carries on. London,
Lifbon, and Copenhagen, are, perhaps, the only three cities in
Europe, which are both the conftant refidence of a court, and can
at the fame time be confidered as trading cities, or a^ cities which
trade not only for their own confumption, but for that of other
cities and countries. The fituation of all the three is extremely
advantageous, and naturally fits them to be the entrepots of a great
part of the goods deflined for the confumption of diftant places.
In a city where a great revenue is ipent, to employ with advantage
a capital for any other purpofe than for fupplying the confumption
of that city, is probably more difficult than in one in which the
inferior ranks of people have no other maintenance but what they
derive from the employment of fuch a capital. The idlenefs of the
greater part of the people who are maintained by the expence- of
revenue, corrupts, it is probable, the induflry of thofe who ought
to be maintained by the employment of capital, and renders it lefs
advantageous to employ a capital there than in other places.
There was little trade or induflry in Edinburgh before the union.
When the Scotch parliament was no longer to be aflembled in it,
when it -ceafed to be the neceffary refidence of the principal nobility
4 and

THE WEALTH OF NATIONS.

and gently of Scotland, it became a city of fome trade and induftry. C HA P.
It ftill continues, however, to be the refidence of the principal <- — /—J
courts of juftice in Scotland, of the boards of cuftoms and excife,
&c. A confiderable revenue, therefore, ftill continues to be fpent
in it. In trade and induftry it is much inferior to Glafgow, of
which the inhabitants are chiefly maintained by the employment of
capital. The inhabitants of a large village, it has fometimes been
obferved, after having made confiderable progrefs in manufactures,
have become idle and poor, in confequence of a great lord's having
taken up his refidence in their neighbourhood.

The proportion between capital and revenue, therefore, feems
every where to regulate the proportion between induftry and
idlenefs. Wherever capital predominates, induftry prevails : Where-
ever revenue, idlenefs. Every increafe or diminution of capital,
therefore, naturally tends to increafe or diminifli the real quantity of
induftry, the number of produ6live hands, and confequently the
exchangeable value of the annual produce of the land and labour
of the country, the real w^ealth and revenue of all its inhabi-
tants.

Capitals are increafed by parfimony, and diminiftied by pro-
digality and mifconducl.

Whatever a perfon faves from his revenue he adds to his
capital, and either employs it himfelf in maintaining an additional
number of produ6live hands, or enables fome other perfon to do fo,
by lending it to him for an intereft, that is, for a ftiare of the
profits. Afi the capital of an individual can be increafed only
by what he faves from his annual revenue or his annual gains,
fo the capital of a fociety, which is the fame with that of all the
Vol. I. 3 G individuals

|.io THE NATURE AND CAUSES OF

B O^O K individuals who compofe it, can be increafed only in the fame
c — > manner.

Parsimony and not induftry is the immediate caufe of the
increafe of capital. Induftry, indeed, provides the fubjeft vt^hich
parfimony accumulates. But whatever induftry might acquire,
if parfimony did not fave and ftore up, the capital would never
be the greater^

Parsimony, by increafing the fund which is deftined for the
maintenance of produ6live hands, tends to increafe the number
of thofe hands whofe labour adds to the value of the fubje<5l
upon which it is beftowed. It tends therefore to increafe the
exchangeable value of th« annual produce of the land and labour
of the country. It puts into motion an additional quantity of
induftry, which gives an additional value to the annual produce.

What is annually faved is as regularly confumed as what is
annually fpent, and nearly in the fame time too j but it is con-
fumed by a different fett of people. That portion of his re-
venue which a rich m.an annually fpends, is in moft cafes con-
fumed by idle guefts, and menial fervants, who leave nothing
behind them in return for their confumption. That portion
which he annually faves, as for the fake of the profit it is im^
mediately employed as a capital, is confumed in the fame manner,
and nearly in the fame time too, but by a different fett of people,
by labourers, manufa6lurers, and artificers, who re-produce with
, a profit the value of their annual confumption, Kis revenue,
we fhall fuppofe, is paid him in money. Had he fpent the
whole, the food, cloathing, and Jod^^ing which the whole could
have purchafed, would have been diftributed among the former
fett of people. By faving a part of it, as that part is ^or the

7 fake

THE WEALTH OF NATIONS.

411

fake of the profit immediately employed as a capital either by C HA P.

himfelf or by fome other perfon, the food, cloathing, and lodging, v.^ —
which may be purchafed with it, are neceffarily refervcd for the latter.
The confumption is the fame, but the confumers are different.

By what a frugal man annually faves, he not only affords
maintenance to an additional number of produ6live hands, for
that or the enfuing year, but, like the founder of a publick
workhoufe, he eftablifhes as it were a perperual fund for the
maintenance of an equal number in all times to come. The
perpetual allotment and deftination of this fund, indeed, is not
always guarded by any pofitive law, by any truft-right or deed of
mortmain. It is always guarded, however, by a very powerful
principle, the plain and evident intereft of every individual to whom
any fhare of it fhall ever belong. No part of it can ever after-
wards be employed to maintain any but produ6live hands, without
an evident lofs to the perfon who thus perverts it from its propei'
deflination.

The prodigal perverts it in this manner. By not confining
his expence within his income, he encroaches upon his capital.
Like him who perverts the revenues of fome pious foundation
to profane purpofes, he pays the wages of idlenefs with thofe
funds which the frugality of his forefathers had, as it were, con-
fecrated to the maintenance of induftry. By diminifhing the
funds deftined for the employment of produ6live labour, he
necefTarily diminiflies, fo far as depends upon him, the quantity
of that labour which adds a value to the fubjedl upon which it
is bellowed, and, confequently, the value of the annual produce
of the land and labour of the whole country, the real wealth
and revenue of its inhabitants. If tiie prodigality of fome was
not compenfated by the frugality of others, the conduft of every

3 G 2 prodigal.

^12 THE NATURE AND CAUSES OF

B O^O K prodigal, by feeding the idle with the bread of the induftrious,
u— tends not only to beggar himfelf, but to impoverifli his country.

Though the expence of the prodigal fliould be altogether in
hom.e-made and no part of it in foreign commodities, its effe6l
upon the produ6live funds of the fociety would ftill be the fame.
Every year there would ftill be a certain quantity of food and
cloathing, which ought to have maintained productive, employed
in maintaining unproductive hands. Every year, therefore, there
would ftill be fome diminution in what would otherwife have
been the value of the annual produce of the land and labour of
the country.

This expence, it may be faid indeed, not being in foreign
goods, and not occafioning any exportation of gold and filver,,
the fame quantity of money would remain in the country as
before. But if the quantity of food and cloathing, which were
thus confumed by unproductive, had been diftributed among
productive hands, they would have reproduced, together with a
profit, the full value of their confumption. The fame quantity of
money would in this cafe equally have remained in the country,
and there would befides have been a reproduction of an equal
value of confumable goods. There would have been two values
inftead of one.

The fame quantity of money befides cannot long remain in
any country, in which the value of the annual produce diminifhes.
The fole ufe of money is to circulate confumable goods. By
means of it, provifions, materials, and finifhed work, are bought
and fold, and diftributed to their proper confumers. The quantity
of money, therefore, which can be annually employed in any
country muft be determined by the value of the confumable goods
annually circulated within it. Thefe muft confift either in the

immediate

THE WEALTH OF NATIONS.

im-mcdiate produce of the land and labour of the country itfelf, C
ar in fomething which had been purchafed with fome part of that u
produce. Their value, therefore, muft diminifh as the value of
that produce diminifhes, and along with it the quantity of money
which can be employed in circulating them. But the money
which by this annual diminution of produce is annually thrown
out of domeftick circulation will not be allowed to lie idle. The
intereft of whoever pofleffes it, requires that it fnould be employed.
But having no employment at home, it will, in fpite of all lav/3
and prohibitions, be fent abroad, and employed in purchafing
confumable goods which may be of fome ufe at home. Its annual
exportation will in this manner continue for fome time to add
fomething to the annual confumption of the country beyond the
value of its own annual produce. What in the days of its prof-
perity had been faved from that annual produce, and employed
in purchafing gold and filver, will contribute for fome little time
to fupport its confumption in adverfity. The exportation of gold
and filver is, in this cafe, not the caufe, but the effect of its declen-
fion, and may even for fome little time alleviate the r^ei^ of ^that.
declenfion, . > '

The quantity of money, on the contrary, muft in every
country naturally increafe as the value of the annual produce
increafes. The value of the confumable goods annually circulated
within the fociety being greater, will require a greater quantity
of money to circulate them. A part of the increafed produce,
therefore, will naturally be employed in purchafing, wherever it
{s to be had, the additional quantity of gold and filver neceffary
for circulating the reft. The increafe of thofe metals will in this
cafe be the effect, not the caufe, of the publick profperity. Gold
and filver are purchafed every where in the fame manner. The
food, cloathing, and lodging, the revenue and maintenance of

all

,.14 THE NATURE AND CAUSES OF

BOOK all thofe whofe labour or flock is employed in bringing them from
Y--— » the mine to the market, is the price paid for them in Peru as
well as in England. The country which has this price to pay,
will never be long without the quantity of thofe metals which it
has occafion for ; and no country will ever long retain a quantity
which it has no occafion for.

Whatever, therefore, we may imagine the real wealth and
revenue of a country to confifl in, whether in the value of the
annual produce of its land and labour, as plain reafon feems to
di6l:ate ; or in the quantity of the precious metals which circulate
within it, as vulgar prejudices fuppofe ; in either view of the
matter, every prodigal appears to be a publick enemy, and every
frugal man a publick benefaftor.

The effects of mifconducl are often the fame as thofe of pro-
digality. Every injudicious and unfuecefsful project in agricul-
ture, mines, fiflieries, trade, or manufa6lures, tends in the fame
manner to diminifh the funds defined for the maintenance of
productive labour. In every fuch projed, though the capital is
confumed by produftive hands only, yet, as by the injudicious
manner in which they are employed, they do not reproduce the
full value of their confumption, there muft always be fome dimi-
nution in what would otherwife have been the produdive funds of
the fociety.

It can feldom happen, indeed, that the circumftances of a
great nation can be much afFe6led either by the prodigality or
mifcondu6l of individuals j the profufion or imprudence of fome
being always more than compenfated by the frugality and good
conduct of others.

With

THE WEALTH OF NATIONS.

With regard to profafion, the principle, which prompts to ^
expence, is the palTioii for prefent enjoyment ; which, though fome-
times violent and very difficult to be reftramed, is in general only
momentary and occafional. But the principle which prompts to
Jfave, is the defire of bettejing our condition, a defire which,
though generally calm and difpaffionate, comes with us from the
•womb, and never leaves us till we go into the grave. In the
whole interval which feparates thofe two moments, there is fcarce
perhaps a fingle inftant in which any man is fo perfeftly and.
compleatly fatisfied with his fituation, as to be without any
wifh of alteration or improvement of any kind. An augment
tation of fortune is the means by which the greater part of men
propofe and wifh to better their condition. It is the means the
moft vulgar and the moft obvious ; and the mofl likely way of
augmenting their fortune, is to fave and accumulate fome part of
what tliey acquire, either regularly and annually, or upon fome
extraordinary occdlions. Though the principle of expence, there-
fore, prevails in almoil all men upon fome occafions, and in
fome men upon almoll all occafions, yet in the greater part of
men, taking the whole courfe of their life at an average, the
principle of frugality feems not only to predominate, but to pre*
dominate very greatly.

With regard to mifcondu6l, the number of pmdent and fuc-
cefsful undertakings is every where much greater than that of
injudicious and unfuccefsful ones. After all our complaints of
the frequency of bankruptcies, the unhappy men who fall into
this misfortune make but a very fmall part of the whole number
engaged in trade, and all other forts of bufmefs; not much more
perhaps than one in a thcuf-nd. Bankruptcy is perhaps the
greateft and mofl humiliating calamity which can befal an innocent
man. The greater part- of men, therefore, are fufficiently care-
ful

THE NATURE AND CAUSES OF

ful to avoid it. Some, indeed, do not avoid it; as fome do not
— » avoid the gallows.

Great nations are never impoveriflied by private, though they
fometimes are by publick prodigality and mifcondu6t. The whole,
or almoft the whole publick revenue, is in moft countries employed
in maintaining unproductive hands. Such are the people who
compofe a numerous and fplendid court, a great ecclefiaftical eftab-
lilhment, great fleets and armies, who in time of peace produce
Clothing, and in time of war acquire nothing which can compenfate
•the expence of maintaining them, even while the war lafls. Such
people, as they themfelves produce nothing, are all maintained
by the produce of other men's labour. When multipUed, there-
fore, to an unneceflary number, they may in a particular year
confume fo great a fhare of this produce, as not to leave a fuf-
iiciency for maintaining the produ6live labourers, who fhould re-
produce it next year. The next year's produce, therefore, will
be lefs than that of the foregoing, and if the fame diforder fliould
continue, that of the third year will be flill lefs than that of
the fecond. Thofe unprodu6live hands, who fhould be main-
tained by a part only of the fpare revenue of the people, may
confume fo great a fliare of their whole revenue, and thereby
oblige fo great a number to encroach upon their capitals, upon
the funds deftined for the maintenance of produ6live labour, that
all the frugality and good conduct of individuals may not be able
to compenfate the wafte and degradation of produce occafioned by
this violent and forced encroachment.

This frugality and good condu6l, however, is upon moft oc-
cafions, it appears from experience, fufHcient to compenfate, not
only the private prodigality and mifcondu6t of individuals, but
XhQ pubUck extravagance of government. The uniform, conftant,

4 and

THE WEALTH OF NATIONS. 4x5

•,and uninterrupted effort of every man to better his condition, CHAP,
the principle from which pubUck and national, as well as private u.—
opulence is originally derived, is frequently powerful enough to
maintain the natural progrefs of things towards improvement, in
fpite both of the extravagance of government, and of the greatcfl:
errors of adminiftration. Like the unknown principle of animal
life, it frequently reftores health and vigour to the conftitution, in
fpite, not only of the difeafe, but of the abfurd prefcriptions of
the do6lor.

The annual produce of the land and labour of any nation can
be inc'reafed in its value by no other means, but by increafing either
the number of its productive labourers, or the produ6live powers
of thofe labourers who had before been employed. The number
of its productive labourers, it is evident, can never be much
mcreafed, but in confequence of an increafe of capital, or of the
funds deftined for maintaining them. The productive powers of
the fame number of labourers cannot be increafed, but in con-
fequence either of fome addition and improvement to thofe machines
and inftruments which facilitate and abridge labour ; or of a more
proper divilion and diftribution of employment. In either cafe
an additional capital is almoft always required. It is by means
of an additional capital only that the undertaker of any work can
either provide his workmen with better machinery, or make a more
proper diftribution of employment among them. When the work
to be done confifts of a number of parts, to keep every man con-
ftantly employed in one way, requires a much greater capital than
where every man is occafionally employed in every different part
of the work. When we compare, therefore, the ftate of a nation
at two different periods, and find, that.tlie annual produce of its
land and labour is evidently greater at the latter than at the formei*,
that its lands are better cultivated, its manufactures more nlime-

Vol. I. 3 H rous

4i8

THE NATURE AND CAUSES OF

B O^O K rous and more flourifhing, and its trade more extenfive, we may
v-i-»-^ be afTured that its capital muft have increafed during the interval
between thofe two periods, and that more muft have been added to
it by the good conduft of fome, than had been talcen from it either
by the private mifcondu6l of others, or by the publick extravagance
of government. But we fhall find this to have been the cafe of
almoft all nations, in all tolerably quiet and peaceable times, even'
of thofe who have not enjoyed the moft prudent and parfimonious
. governments. To form a right judgement of it, indeed, we muft
compare the ftate of the country at periods fomewhat diftant from
one another. The progrefs is frequently fo gradual, that, at near
periods, the improvement is not only not fenfible, but from the
declenfion either of certain branches of induftry, or of certain
diftri6ls of the country, things which fometimes happen though the
country in general is in great profperity, there frequently
arifes a fufpicion, that the riches and induftry of the whole
are decaying.

The annual produce of the land and labour of England, for
example, is certainly much greater than it was, a little more than
a century ago, at the reftoration of Charles II. Though at
prefent, few people, I believe, doubt of this, yet during this
period, five years have feldom pafled away in which fome book
or pamphlet has not been publiftied, written too with fuch abilities
as to gain fome authority with the publick, and pretending to
demonftrate that the wealth of the nation was faft declining, that
the country was depopulated, agriculture negle6led, manufactures
decaying, and trade undone. Nor have thefe publications been
all party pamphlets, the wretched offspring of falfhood and venality.
Many of them have been written by very candid and very intelligent
people ; who wrote nothing but what they believed, and for no
other reafon but becaufe they believed it,

Thb

THE WEALTH OF NATIONS. 4i(

The annual produce of the land and labour of England again, C ^^AP.
was certainly much greater at the reftoration, than we can fuppofe t^-y^
it to have been about an hundred years before, at the acceffion of
Elizabeth. At this period too, we have all reafon to beUeve, the
country was much more advanced in improvement, than it had been
about a century before, towards the clofe of the diflenfions between
the houfes of York and Lancafter. Even then it was, probably,
in a better condition than it had been at the Norman conqueft, and
at the Norman conqueft, than during the confufion of the Saxon
Heptarchy. Even at this early period, it was certainly a more
improved country than at the invafion of Julius Caefar, when its
inhabitants were nearly in the fame ftate with the favages in
North America.

In each of thofe periods, however, there was not only much private
and publick profufion, many expenfive and unneceffary wars, great
perverlion of the annual produce from maintaining produdlive to
maintain unprodu6tive hands ; but fometimes, in the confufion
of civil difcord, fuch abfolute wafte and deftrudion of ftock, as
might be fuppofed, not only to retard, as it certainly did, the
natural accumulation of riches, but to have left the country, at the
end of the period, poorer than at the beginning. Thus, in the
happieft and moft fortunate period of them all, that which has
paffed fmce the reftoration, how many diforders and misfortunes
have occurred, which, could they have been forefeen, not only the
impoveriftiment, but the total ruin of the country would have been
expected from them ? The fire and the plague of London, the two
Dutch wars, the diforders of the revolution, the war in Ireland,
the four expenfive French wars of 1688, 1701, 1742, and 1756,
together with the two rebellions of 171 5 and 1745. In the courfe of
the four French wars, the nation has contra6led more than a
hundred and forty five millions of debt, over and above all the

3 H 2 other

THE NATURE AND CAUSES OF

B O^O K other extraordinary annual expence which they occafioned. To that
V — the whole cannot be computed at lefs than two hundred milUons.
So great a fhare of the annual produce of the land and labour
of the country, has, fince the revolution, been employed upon
different occafions, in maintaining an extraordinary number of un-
produdive hands. But had not thofe wars given this particular
diredion to fo large a capital, the greater part of it would naturally
have been employed in maintaining produ6live hands, whofe labour
would have replaced, with a profit, the whole value of their
confumption. The value of the annual produce of the land and
labour of the country, would have been considerably increafed
by it every year, and every year's increafe would have augmented
flill more that of the next year. More houfes would have been
built, more lands would have been improved, and thofe which had
been improved before would have been better cultivated, more
manufactures would have been eftabliflied, and thofe which had
been eflabliihed before would have been more extended ; and to
what height the real wealth and revenue of the country might, by
this time, have been raifed, it is not perhaps very eafy even to
imagine.

But though the profufion of government muft, undoubtedly,
have retarded the natural progrefs of England towards wealth and
improvement, it has not been able to flop it. The annual produce
of its land and labour is, undoubtedly, much greater at prefent
than it was either at the refloration or at the revolution. The
capital, therefore, annually employed in cultivating this land, and
in maintaining this labour, mufl likewife be much greater. In the
midft of all the exactions of government, this capital has been
filently and gradually accumulated by the private frugality and
good condu6l of individuals, by their univerfal, continual, and
uninterrupted effort to better their own condition. It is this effort,

7 protected

THE WEALTH OF NATIONS.

421

protected by law and allowed by liberty to exert itfelf in the ^ HA P.
manner that is moft advantageous, which has maintained the v.-— v— J
progrefe of England towards opulence and improvement in almoft
all former times, and which, it is to be hoped, will do fo in all
future times. England, however, as it has never been blelTed with
a very parfimonious government, fo parfimony has at no time been
the characleriftical virtue of its inhabitants. It is the higheft im-
pertinence and prefumption, therefore, in kings and minifters, to
pretend to watch over the oeconomy of private people, and to
reftrain their expence either by fumptuary laws, or by prohibiting
the importation of foreign luxuries. They are themfelves always,
and without any exception, the greateft fpendthrifts in the fociety.
Let them look, well after their own expence, and they may fafely
truft private people with theirs. If their own extravagance does not
ruin the Hate, that of their fubje6fs never will.

As frugality increafes, and prodigality diminifhes the publick
capital, fo the conduft of thofe, whofe expence juft equals their
revenue, without either accumulating or encroaching, neither
increafes nor diminiflies it. Some modes of expence, however,
feem to contribute more to the growth of publick opulence
than others.

The revenue of an individual may be fpent, either in things
which are confumed immediately, and in which one day's expence
can neither alleviate nor fupport that of another; or it may be
fpent in things more durable, which can thei efore be accumulated,
and in which every day's expence may, as he chufes, either alleviate,
or fupport and heighten the effe6l of that of the following day.
A man of fortune, for example, may either fpend his revenue
in a profufe and fumptuous table, and in maintaining a great number
of menial fervants, and a multitude of dogs and horfes ; or con-
tenting

^22 THE NATURE AND CAUSES OF

B O^O K tenting h'lmfelf with a frugal table and few attendants, he may lay
u— out the greater part of it in adorning his houfe or his country villa,
in ufeful or ornamental buildings, in ufeful or ornamental furniture,
in colle6ling books, ftatues, pi6lures j or in things more frivolous,
jewels, baubles, ingenious trinkets of different kinds ; or, what
is moft trifling of all, in amaffmg a great wardrobe of fine clothes,
like the favourite and minifler of a great prince who died a few
years ago. Were two men of equal fortune to fpend their revenue,
the one chiefly in the one way, the other in the other, the magni-
ficence of the perfon whofe expence had been chiefly in durable
commodities, would be continually increafing, every day's expence
contributing fomething to fupport and heighten the effect of that
of the following day : That of the other, on the contrary, would
be no greater at the end of the period than at the beginning. The
former too would, at the end of the period, be the richer man of
the two. He would have a flock of goods of fome kind or other,
which, though it might not be worth all that it cofl, would always
be worth fomething. No trace or veftige of the expence of the
latter would remain, and the effe6ls of ten or twenty years pro-
fufion would be as compleatly annihilated as if they had never
exifled.

As the one mode of expence is more favourable than the other
to the opulence of an individual, fo is it likewife to that of a nation.
The houfes, the furniture, the cloathing of the rich, in a little
time, become ufeful to the inferior and middling ranks of people.
They are able to purchafe them when their fuperiors grow weary of
them, and the general accommodation of the whole people is thus
gradually improved, when this mode of expence becomes univerfal
among men of fortune. In countries which have long been rich,
/ you will frequently find the inferior ranks of people in poffefTion

both of houfes and furniture perfe6lly good and entire, but of

which

THE WEALTH OF NATIONS.

■which neither the one could have been built, nor the other have C HA P.
been made for their ufe. What was formerly a feat of the family v--^
of Seymour, is now an inn upon the Bath road. The marriage
bed of James the Ift of Great Britain, which his Queen brought
with her from Denmark, as a prefent fit for a fovereign to make
to a fovereign, was, a few years ago, the ornament of an alehoufe
at Dunfermline. In fome ancient cities, which either have been long
ftationary, or have gone fomewhat to decay, you will fometimes
fcarce find a fingle houfe which could have been built for its prefent
inhabitants. If you go into thofe houfes too, you will frequently find
many excellent, though antiquated pieces of furniture, which are ftill
very fit for ufe, and which could as little have been made for them.
Noble palaces, magnificent villas, great coUeftions of books, ftatues,
pi6lures, and other curiofities, are frequently both an ornament
and an honour, not only to the neighbourhood, but to the whole
country to which they belong. Verfailles is an ornament and an
honour to France, Stowe and Wilton to England. Italy ftill
continues to command fome fort of veneration by the number of
monuments of this kind which it polTelTes, though the wealth which
produced them has decayed, and the genius which planned them
feems to be extinguiflied, perhaps from not having the fame
employment.

The expence too, which is laid out in durable commodities>
is favourable, not only to accumulation, but to frugality. If a
perfon fhould at any time exceed in it, he can eafily reform
without expofing himfelf to the cenfure of the publick. To reduce
very much the number of his fervants, to reform his table from
great profufion to great frugality, to lay down his equipage after he
lias once fet it up, are changes which cannot efcape the obfervation
of his neighbours, and which are fuppofed to imply fome ac-
knowledgement of preceding bad conduct. Few, therefore, of thofe

4 who

THE NATURE AND CAUSES OF

B O^O K who have once been fo unfortunate as to launch out too
I — far into this fort of expence, have afterwards the courage
to reform, till ruin and bankruptcy oblige them. But .if a perfon
has, at any time, been at too great an expence in building,
in furniture", in books or pi6lures/ no imprudence can be in-
ferred from his changing his condud:. Thefe are things in which
further expence is frequently rendered unneceffary by former
expence j and when a perfon flops fhort, he appears to do
fo, not becaufe he has exceeded his fortune, but becaufe he has
fatished his fancy.

The expence, befides, that is laid out in durable com-
modities, gives maintenance, commonly, to a greater number
of people, than that which is employed in the moft profufe
hofpitality. Of two or three hundred weight of provifions, which
may fometimes be ferved up at a great feftival, one-half, perhaps,
is thrown to the dunghill, and there is always a great deal wafted
and abufed. But if the expence of this entertainment had been
employed in fetting to work, mafons, carpenters, upholfterers,
mechanicks, a quantity of provifions, of equal value, would
have been diftributed among a ftill greater number of people,
who would have bought them in penny-worths and pound
weights, and not have loft or thrown away a ftngle ounce
of them. In the one way, befides, this expence maintains pro-
ductive, in the other unproduclive hands. In the one way,
therefore, it increafes, in the other, it does not increafe, the
exchangeable value of the annual produce of the land and labour
of the country.

I WOULD not, however, by all this be underftood to mean,
that the one fpecies of expence always betokens a more liberal
or generous fpirit than the other. When a man of fortune
c fpends

THE WEALTH OF NATIONS.

425

Ipends his revenue chiefly in holpitality, he fhares the greater C HA P.
part of it with his friends and companions; but when he
employs it in purchafing fuch durable commodities, he often
Ipends the whole upon his own perfon, and gives nothing
to any body without an equivalent. The latter fpecies of ex-
pence, therefore, efpecially when directed towards frivolous
obje6ls, the little ornament's of drefs and furniture, jewels,
trinkets, gewgaws, frequently indicates, not only a trifling, but
a bafe and felfifli difpofition. All that I mean is, that the
.one fort of expence, as it always occafions fome accumu-
lation of valuable commodities, as it is more favourable to
private frugality, and, confequently, to the increafe of the
publick capital, and as it maintains produ6live, rather than
unproductive hands, conduces more than the other to the
growth of publick opulence.

Vol. I.

3 I

THE .N[4X,URE AND CAUSES OF

Bi5fl od slqoaq io zrio)

"ff'* 'XiHAF. IV.

(1 bn^

oTiod ^nomr, ir^Qj ^^^^^ /^^^ Infere^.

TH E ftoek which is lent at intereft is always confidered as
a capital by the lender. He experts that in due time
it is to be reftored to him, and that in the mean time the bor-
rower is to pay him a certain annual rent for the ufe of it. The
borrower may ufe it either as a capital, or as a ftock referved for
immediate confumption. If he ufes it as a capital, he employs it
in the maintenance of produ6live labourers, who reproduce the
value with a profit. He can, in this cafe, both reftore the capital
-and pay the intereft without alienating or encroaching upon any
other fource of revenue. If he ufes it as a ftock referved for im-
mediate confumption, he a6ls the part of a prodigal, and diffipates
in the maintenance of the idle, what was deftined for the fupport
of the induftrious. He can, in this cafe, neither reftore the capital
nor pay the intereft, without either alienating or encroaching upon
fome other fource of revenue, fuch as the property or the rent
of land.

The ftock which is lent at intereft, is, no doubt, occafionally em-
ployed in both thefe ways, but in the former much more frequently
than in the latter. The man who borrows in order to fpend will
foon be ruined, and he who lends to him will generally have occafion
to repent of his folly. To borrow or to lend for fuch a purpofe,
therefore, is in all cafes, where grofs ufury is out of the queftion,
contrary to the intereft of both parties; and though it no
doubt happens fometimes that people do both the one and
the other; yet, from the regard that all men have for their own
intereft, we may be allured, that it cannot happen fo very fre-
quently as we are fometimes apt to imagine. Afk any rich man

THE WEALTH OF NATIONS. 42;

of common prudence, to which of the two forts of people he has ^ ^*
lent the greater part of his ftock, to thofe who, he thinks, will v.-—
employ it profitably, or to thofe who will fpend it idly, and he will
laugh at you for propofing the queftion. Even among borrowers,
therefore, not the people in the world moft famous for frugality,,
the number of the frugal and induftrious furpaffes confiderably that
of the prodigal and idle.

The only people to whom ftock is commonly lent, without their
being expe6led to make any very profitable ufe of it, are country,
gentlemen who borrow upon mortgage. Even they fcarce ever
borrow merely to fpend. What they borrow, one may fay, is
commonly fpent before they borrow it. They have generally con-
fumed fo great a quantity of goods, advanced to them upon credit
by fhopkeepers and tradefmen, that they find it necefiary to borrow
at intereft in order to pay the debt. The capital borrowed replaces the
capitals of thofe fhopkeepers and tradefmen, which the country gen-
tlemen could not have replaced from the rents of their eftates. It-
is not properly borrowed in order to be fpent, but in order to
replace a capital which had been fpent before*.

Almost all loans at intereft are made m money, either of
paper, or of gold and filver. But what the borrower really wants;
and what the lender really fupplies him with, is, not the money;
but the money's worth, or the goods which it can purchafe.
If he wants it as a ftock for immediate confumption, it is thofe
goods only which he can place in that ftock. If he wants it as
a capital for employing induftry, it is from thofe goods only that
the induftrious can be furniftied with the tools, materials, and
maintenance, necelTary for carrying on their work. By means of
the loan, the lender, as it were, afllgns to the borrower his right
to a certain portion of the annual produce of the land and labour
of the country, to be employed as the borrower pleafes.

3 I 2 The

418-

THE NATURE AND CAUSES OF

B op K The quantity of flock, therefore, or, as it is commonly ex-

k preffed, of money which can be lent at intereft in any country,

is not regulated by the value of the money, whether paper or
coin, which ferves as the inftrument of the different loans
made in that country, but by the value of that part of the
annual produce which, as foon as it comes either from the
ground, or from the hands of the produ6live labourers, is deflined
not only for replacing a capital, but fuch a capital as the owner
does not care to be at the trouble of employing himfelf. As fuch
capitals are commonly lent out and paid back in money, they
conflitute what is called the monied interefl. It is diflincf, not
only from the landed, but from the trading and manufacturing
interefls, as in thefe laft the owners themfelves employ their own
capitals. Even in the monied interefl, however, the money is,
as it were, but the deed of aflignment, which conveys from one
hand to another thofe capitals which the owners do not care to
employ themfelves. Thofe capitals may be greater in almofl any
proportion, than the amount of the money which feives as the
inflrument of their conveyance ; the fame pieces of money fuc-
ceffively ferving for many different loans, as well as for many
different purchafes. A, for example, lends to W a thoufand
pounds, with which W immediately purchafes of B a thoufand
pounds worth of goods. B having no occafion for the money
himfelf, lends the identical pieces to X, with which X immediately
purchafes of C another thoufand pounds worth of goods. C in the
farrie manner, and for the fame reafon, lends them to Y, who
again purchafes goods with them of D. In this manner the fame
pieces, either of coin, or of paper, may, in the courfe of a few
'days, ferve as the inflrument of three different loans, and of three
different purchafes, each of which is, in value, equal to the whole
amount of thofe pieces. What the three monied men A, B, and
C, affign to the three borrowers, W, X, Y, is the power of
making thofe purchafes. In this power confifl both the value and

the

THE WEALTH OF NATIONS,

the ufe of the loans. The ftock lent by the three monied men, is C H A P,
equal to the value of the goods which can be purchafed with it, v„p-y--—
and is three times greater than that of the money with which the
purchafes are made. Thofe loans, however, may be all perfectly
well fecured, the goods purchafed by the different debtors being
fo employed, as, in due time, to bring back, with a profit, an
equal value either of coin or of paper. And as the fame pieces of
money can thus ferve as the inflrument of different loans to
three, or, for the fame reafon, to thirty times their value,
fo they may likewife fucceffively ferve as the inftrument of re-
payment.

A CAPITAL lent at intereft may, in this manner, be confidered
as an aflignment from the lender to the borrower of a certain
confiderable portion of the annual produce } upon condition that the
borrower in return (hall, during the continuance of the loan, annually
afiign to the lender a fmaller portion, called the intereft j and at the
end of it a portion equally confiderable with that which had
originally been alTigned to him, called the repayment. Though
money, either coin or paper, ferves generally as the deed of
affignment both to the fmaller, and to the more confiderable
portion, it is itfelf altogether different from vvJiat,i? a.iligned
i>y it. V ■•■-^-,r, . .

In proportion as thait fhare of the annual produce which, as
foon as it comes either from the ground, or from the hands of the
produ6live labourers, is deftined for replacing a capital, increafes
in any country, what is called the monied intereft naturally
increafes with it. The increafe of thofe particular capitals from
which the owners wifh to derive a revenue, without being at
the trouble-) of employing them themfelves, naturally accompanies
the general increafe of capitals ; or in other words, as ftock
7 increafes.

THE NATURE AND CAUSES OF

K Increafes, the quantity of ftocktobe lent atintereft grows gradually
-> greater and greater.

As the quantity of ftock to be lent at intereft increafes, the in-
tereft, or the price which muft be paid for the ufe of that ftock,
neceflarily diminiflies, not only from thofe general caufes which
make the market price of things commonly diminifli as their quan-
tity increafes, but from other caufes which are peculiar to this
particular cafe. As capitals increafe in any country, the profits
which can be made by employing them neceflarily diminifli. It
becomes gradually more and more difficult to find within the coun-
try a profitable method of employing any new capital. There
arifes in confequence a competition between different capitals, the
owner of one endeavouring to get poflTefljon of that employment
which is occupied by another. But upon moft occafions he can
hope to juftie that other out of this employment, by no other
means but by dealing upon more reafonable terms. He muft not
only fell what he deals in fomewhat cheaper, but in order to get it
to fell, he muft fometimes too buy it dearer. The demand for pro-
du6live labour, by the increafe of the funds which are deftined
for maintaining it, grows every day greater and greater. Labourers
eafily find employment, but the owners of capitals find it difficult
to get labourers to employ. Their competition raifes the wages
of labour, and finks the profits of ftock. But when the profits
which can be made by the ufe of a capital are in this manner di-
miniftied as it were at both ends, the price which can be paid for
the ufe of it, that is the rate of intereft, muft necelFarily be di-
miniftied with them.

Mr. Locke, Mr. Law, and Mr. Montefquiou, as well as many
other writers, feem to have imagined that the incteafe of the
quantity of gold and filver, in confequence of the difcovery of

4 the

THE WEALTH OF NATIONS.

43'

the Spanifli Weft Indies, was the real caufe of the lowering of C P.
the rate of intereft through the greater part of Europe. Thofe u--v-^
metals, they fay, having become of lefs value themfelves, the ufe
of any particular portion of them neceflarily became of lefs value
too, and confequently the price which could be paid for it. This
notion, which at firft fight feems fo plaufible, has been fo fully
expofed by Mr. Hume, that it is, perhaps, unneceflary to fay any
thing more about it. The following very Ihort and plain argu-
ment, however, may ferve to explain more diftin6lly the fallacy
which feems to have mifled thofe gentlemen.

Before the difcovery of the Spanifh Weft Indies, ten percent,
feems to have been the common rate of intereft through the greater
part of Europe. It has fmce that time in different countries funk
to fix, five, four, and three per cent. Let us fuppofe that in every
particular country the value of filver has funk precifely in the fame
proportion as the rate of intereft ; and that in thofe countries, for
example, where intereft has been reduced from ten to five per
cent, the fame quantity of filver can now purchafe juft half the
quantity of goods which it could have purchafed before. This
fuppofition will not, I believe, be found any where agreeable to
the truth, but it is the moft , favourable to the opinion which we
are going to examine; and even upon this fuppofition it is utterly
impoffible that the lowering of the value of filver could have the
fmalleft tendency to lower the rate of intereft. If a hundred
pounds are in thofe countries now of no more value than fifty
pounds were then, ten pounds muft now be of no more value than
five pounds were then'. Whatever were the caufes which lowered
the value of the capital, the fame muft neceffarily have lowered
that of the intereft, and exadly in the fame proportion. The pro-
portion between the value of the capital and that of the intereft,
muft have remained the f^.me, though the rate had never been

altered.

i3fe THE NATURE AND CAUSES OF

BOOK altered. By altering the rate, on the contrary, the proportion
u,,!^!-^ between thofe two values is neceflarily altered. If a hundred
pounds now are worth no more than fifty were then, five pounds
ITOW can be worth no more than two pounds ten fhillings were
then. By reducing the rate of intereft, thjcrefore, from ten to
£ve per centt. we give for the ufe of a capital, which is fuppofed to
be equal to one-half of its former value, an intereft which is equal
to one-fourth only of the value of the former intereft.

Any increafe in the quantity of filver, while that of the com-
modities circulated by means of it remained the fame, could have
no other effe6l than to diminifh the value of that metal. The no-
minal value of all forts of goods would be greater, but their real
value would be precifely the fame as before. They would be ex-
changed for a greater number of pieces of filver ; but the quantity
of labour which they could command, the number of people whom
they could maintain and employ, would be precifely the fame.
The capital of the country would be the fame, though a greater
number of pieces might be requifite for conveying any equal
portion of it from one hand to another. The deeds of afTignment,
like the conveyances of a verbofe attorney, would be more cum-
berfome, but the thing afligned would be precifely the fame as
before, and could produce only the fame effects. The funds for
maintaining produflive labour being the fame, the demand for it
would be the fame. Its price or wages, therefore, though no-
minally greater, would really be the fame. They would be paid
in a greater number of pieces of filverj but they would purchafe
only the fame quantity of goods. The profits of ftock would be
the fame both nominally and really. The wages of labour are
commonly computed by the quantity of filver which is paid to the
labourer. When that is increafed, therefore, his wages appear
to be increafed, though they may fometimes be no greater than

before.

THE WEALTH OF NATIONS.

431

before. But the profits of ftock are not computed by the num- C P.
ber of pieces of filver with which they are paid, but by the pro- ^
portion which thofe pieces bear to the whole capital employed.
Thus in a particular country five fhillings a week are faid to be
the common wages of labour, and ten per cent, the common
profits of ftock. But the whole capital of the country being the
fame as before, the competition between the different capitals of
individuals into which it was divided would likewife be the fame.
They would all trade with the fame advantages and difadvantages.
The common proportion between capital and profit, therefore,
would be the fame, and confequently the common intereft of mo-
ney; what can commonly be given for the ufe of money being
neceffarily regulated by what can commonly be made by the ufe
of it.

Any increafe in the quantity of commodities annually circulated
within the country, while that of the money which circulated
them remained the fame, v/ould, on the contrary, produce many
other important efFe61:s, befides that of raifing the value of the
money. The capital of the country, though it might nominally
be the fame, would really be augmented. It might continue to be
exprelTed by the fame quantity of money, but it would command a
greater quantity of labour. The quantity of produ6live labour
which it could maintain and employ would be increafed, and con-
fequently the demand for that labour. Its wages would naturally
rife with the demand, and yet might appear to fink. They might
be paid with a fmaller quantity of money, but that fmaller quantity
might purchafe a greater quantity of goods than a greater. had
done before. The profits of ftock would be diminifhed both really
and in appearance. The whole capital of the country being aug-
mented, the competition between the different capitals of which
it was compofed, would naturally be augmented along with it.

Vol. I. 3 K The

434-

THE NATURE AND CAUSES OF

B O^O K The owners of thofe particular capitals would be obliged to content
themfelves with a fmaller proportion of the produce of that labour
which their refpe6live capitals employed. The intereft of money,
keeping pace always with the profits of flock, might, in this man-
ner, be greatly diminifhed, though the value of money, or the
quantity of goods which any particular fum could purchafe, was
greatly augmented.

In fome countries the interefl of money has been prohibited by
law. But as fomething can every where be made by the ufe of
money, fomething ought every where to be paid for the ufe of it.'
This regulation, inflead of preventing, has been found from expe-
rience to increafe the evil of ufury the debtor being obliged to
pay, not only for the ufe of the money, but for the rifk which his
creditor runs by accepting a compenfation for that ufe. He is
obliged, if one may fay fo, to infure his creditor from 'the
penalties of ufury.

In countries where interefl' is permitted, the Jaw, in order to
prevent the extortion of ufury, generally fixes the highefl rate
which can be taken without incurring a penalty. This rate ought
always to be fomewhat above the lowefl market price, or the price
which is commonly paid for the ufe of money by thofe who can
give themofl undoubted fecurity. If this legal rate fhould be fixed
below the lowefl market rate, the effe6ls of this fixation mufl be
nearly the fame as thofe of a total prohibition of interefl. The
creditor will not lend his money for lefs than the ufe of it is worth>
and the debtor mufl pay him for the rifk which he runs by ac-
cepting the full value of that ufe. If it is fixed precifely at the
lowefl market price, it ruins with honefl people, who .refpe6l the
laws of their country, the credit of all thofe who cannot give the
very beft fecurity, and obliges them to have recourfe to exorbitant

ufurers.

THE wi'ii^'k' oV W^A 'riot's. 43

ufurers. In a country, fuch as ' Great Britain, where monsy is C P.

lent to government at three per cent, and to private people upon u^sr*««^
good fecurity at four and four and a half j the prefent legal rate,
five per cent, is, perhaps, as proper as any.

The legal rate, it is to be obferved, though it ought to be fomc-
what above, ought not to be much above the loweft market rate.
If the legal rate of intereft in Great Britain, for example, was
fixed fo high as eight or ten per cent, the greater part of the money
which was to be lent, would be lent to prodigals and proje6lors,
who alone would be willing to give this high interefl. Sober
people, who will give for the ufe of money no more than a part
of what they are likely to make by the ufe of it, would not venture
into the competition. A great part of the capital of the country
would thus be kept out of the hands which were moft likely to make
a profitable and advantageous ufe of it, and thrown into thofe
which were moft likely to wafte and deftroy it. Where the legal
rate of intereft, on the contrary, is fixed but a very little above the
loweft market rate, fober people are univerfally preferred, as bor-
rowers, to prodigals and projedlors. The perfon who lends
money gets nearly as much intereft from the former as he dares to
take from the latter, and his money is much fafer in the hands of
the one fett of people than in thofe of the other. A great part of
the capital of the country is thus thrown into the hands in which
it is moft likely to be employed with advantage.

No law can reduce the common rate of intereft below the
loweft ordinary market rate at the time when that law is made. Not-
withftanding the edi6l of 1766, by which the French king attempted
to reduce the rate of intereft from five to four per cent, money
continued to be lent in France at five per cent 3 the law being
evaded in feveral different ways.

3 K 2 The

436 THE NATURE AND CAUSES OF

BOOK The ordinary market price of land, it is to be obferved, depends
}^^^^^ every where upon the ordinary market rate of intereft. The per-
fon who has a capital from which he wiflies to derive a revenue^
without taking the trouble to employ it himfelf, deliberates whether
he fhould buy land with it, or lend it out at intereft. The fuperior
fecurity of land, together with fome other advantages which al-
moft every where attend upon this fpecies of property, will generally,
difpofe him to content himfelf with a fmaller revenue from land,
than what he might have by lending out his money at intereft.
Thefe advantages are fufficient to compenfate a certain differ-
ence of revenue; but they will compenfate a certain difference
only ; and if the rent of land fhould fall fhort of the intereft of
money by a greater difference, nobody would buy land, which
would foon reduce its ordinary price. On the contrary, if the
advantages fhould much more than compenfate the difference,,
every body would buy land, which again would foon raife its ordi-
nary price. When intereft was at ten per cent, land was com-
monly fold for ten and twelve years purchafe. As intereft funk,
to fix, five, and four per cent, the price of land rofe to twenty,
five and twenty, and thirty years purchafe. The market rate of
intereft is higher in France than in England > and the common
price of land is lower. In England it commonly fells at thirty ; in
France at twenty years purchafe.

THE WEALTH OF NATIONS.

437

C H A P. V.

Of the different Employment of Capitals.

THOUGH all capitals are deftined for the maintenance of CHAF.
produdive labour only, yet the quantity of that labour, u-^!^^ >
which equal capitals are capable of putting into motion, varies
extreamly according to the diverfity of their employment; as does
likewife the value which that employment adds to the annual pro-
duce of the land and labour of the country.

A CAPITAL may be employed in four different ways : either,,
firft, in procuring the rude produce annually required for the ufe
and confumption of the focietyj or, fecondly, in manufaduring
and preparing that rude produce for immediate ufe and confump-
tion ; or, thirdly,, in tranfporting either the rude or manufa6tured
produce from the places where they abound to thofe where they
are wanted ; or, laftly, in dividing particular portions of either '
into fuch fmall parcels as fuit the occafional demands of thofe who
want them. In the firft way are employed the capitals of all thofe
who undertake the improvement or cultivation of lands, mines>;.'
or fifheries; in the fecond, thofe of all mafter manufafturers •
in the third, thofe of all wholefale merchants; and in the
fourth, thofe of all retailers. It is difficult to conceive that a
capital fhould be employed in any way which may not be clafTed;.
under fome one or other of thofe four.

Each of thofe four methods of employing a capital is effentially
neceffary either to the exiftence or extenfion of the oth^r three,,
or to the general conveniency of th€ fociety.

Unless-

43^

THE NATURE AND CAUSES OF

BOOK TJnless a capital was employed in furniftiing rude produce to a
t_ ^-.j certain degree of abundance, neither manufaftures nor trade of
any kind could exift.

"Unless a capital was employed in manufa6luring that part of
the rude produce which requires a good deal of preparation before
it can be fit for ufe and confumption, it either would never be.
produced, becaufe there could be no demand for it j or if it was
produced fpontaneoufly, it would be of no value in exchange, and
could add nothing to the wealth of the fociety.

Unless a capital was employed in tranfporting either the rude
or manufa6lured produce from the places where it abounds to
thofe where it is wanted, no more of either could be produced
than was neceflary for the confumption of the neighbourhood.
The capital of the merchant exchanges the furplus produce of
one place for that of another, and thus encourages the induftry
and increafes the enjoyments of both.

Unless a capital was employed in breaking and dividing certain
portions either of the rude or manufa6lured produce, into fuch
fmall parcels as fuit the occafional demands of thofe who want
them, every man would be obliged to purchafe a greater quantity
of the goods he wanted, than his immediate occafions required.
If there was no fuch trade as a butcher, for example, every man
would be obliged to purchafe a whole ox or a whole fheep at a
time. This would generally be inconvenient to the rich, and much
more fo to the poor. If a poor v/orkman was obliged to purchafe a
month's or fix months provifions at a time, a great part of the flock
which he employs as a capital, in the inftruments of his trade, or in
the furniture of his fhop, and which yields him a revenue, he would
be forced to place in that part of his flock which is referved for

4 immediate

♦

THE WEALTH OF NATIONS.

439

immediate confumption, and which yields him no revenue. C Fyv P.
Nothing can be more convenient for fuch a perfon than to be able u- ■v-^-j>
to purcha{e his fubfiftence from day to day, or even from hour to
hour as he wants it. He is thereby enabled to employ almoft
his whole (lock as a capital. He is thus enabled to furnifh work
to a greater value, and the profit which he makes by it in this way
much more than compen fates the additional price which the profit
of the retailer impofes upon the goods. The prejudices of fome
political writers againft fhopkeepers and tradefmen, are altogether
without foundation. So far is it from being neceflary either to
tax them or to reftri6l their numbers, that they can never be
multiplied fo as to hurt the publick, though they may fo as to
hurt one another. The quantity of grocery goods, for example,
which can be fold in a particular town, is limited by the demand
of that town and neighbourhood. The capital, therefore, which
can be employed in the groceiy trade cannot exceed what is fuf-
ficient to purchafe that quantity. If this capital is divided
between two different grocers, their competition will tend to make
both of them fell cheaper, than if it were in the hands of one onlyj
and if it were divided among twenty, their competition would be
juft fo much the greater, and the chance of their combining to*
gether, in order to raife the price, Juft fo much the lefs. Their
competition might perhaps ruin fome of themfelves but to take
care of this is the bufinefs of the parties concerned, and it may
fafely be trufted to their difcretion. It can never hurt either the
confumer, or the producer i on the contrary, it muft tend to make :
the retailers both fell cheaper and buy dearer, than if the whole
-trade was monopolized by one or two perfons. Some of them,
perhaps, may fometimes decoy a weak cuftomer to buy what he
has no occafion for. This ^evil, however, is of too little impor-
tance to deferve the publick attention, nor v/ould it necefTarily be
prevented by reftri6ting their numbers. It is not . the multitude

440

THE NATURE AND CAUSES OF

B 0^0 K of alc-houfes, to give the moft fufpicious example, that occafions
■<-— v"**^ a general difpofition to drunkennefs among the common people ;

but tliat difpofition arifing from other caufes neceffarily gives em-
ployment to a multitude of ale-houfes.

The perfons whofe capitals are employed in any of thofe four
ways are themfelves produ6live labourers. Their labour, when
properly dire6led, fixes and realizes itfelf in the fubje6l or vendible
commodity upon which it is bellowed, and generally adds to its
price the value at leaft of their own maintenance and confumption.
The profits of the farmer, of the manufacturer, of the merchant,
and retailer, are all drawn from the price of the goods which the
two firfl produce, and the two laft buy and fell. Equal capitals
however, employed in each of thofe four different ways, will put
into motion very different quantities of productive labour, and aug-
ment too in very different proportions the value of the annual
, produce of the land and labour of the fociety to which they

belong. ■

The capital of the retailer replaces, together with its profits,
that of the merchant of whom he purchafes goods, and thereby en-
ables him to continue his bufinefs. The retailer himfelf is the only
produ(5tive labourer whom it employs. In his profits, confifls the
whole value which its employment adds to the annual produce of
the land and labour of the fociety.

The capital of the wholefale merchant replaces, together with
their profits, the capitals of the farmers and manufacturers of whom
he purchafes the rude and manufadured produce which he deals
in, and thereby enables them to continue their refpeclive trades.
It is by this fervice chiefly that he contributes indiredly to fupport
the produdive labour of the fociety, and to increafe the value of

its

THE WEALTH OF NATIONS.

441

its annual produce. His capital employs too the failors and C HA P.
carriers who tranfport his goods froili one place ta another, u—
and it augments the price of thofe goods by the value, not only
of his profits, but of their wages. This is all the productive
labour which it immediately puts into motion, and all the value-
which it immediately adds to the annual produce. Its operation
in both thefe refpe6ts is a good deal fuperior to that of the capital
of the retailer.

Part of the capital of the mafter manufadlurer is employed as a
fixed capital in the inftruments of his trade, and replaces, together
with its profits, that of fome other artificer of whom he purchafes
them. Part of his circulating capital is employed in purchafing
materials, and replaces, with their profits, the capitals of the farmers
and miners of whom he purchafes them. But a great part of it is
always, either annually, or in a much fhorter period, diftributed
among the different workmen whom he employs. It augments
the value of thofe materials by their wages, and by their mailers
profits upon the whole ftockof wages,, materials, and inftruments
of trade employed in the bufinefs. It puts into motion, there^
fore, a much greater quantity of produ6live labour, and adds a
much greater value to the annual produce of the land and labour
of the fociety, than an equal capital in the hands of any whole—
lale merchant.

No equal capital puts into motion a greater quantity of produ<5live:
labour than that of the farmer. Not only his labouring fervants,
but his labouring cattle, are produdlive labourers. In agriculture
too nature labours along with man ; and though her labour cofts no
expence, its produce has its value, as well as that of the moft expen-
five workmen. The moft important operations of agriculture feem
intended, not fo much to increafe, though they do that too, as to

V.0L, I.. 3 L- direct

(.4.2 THE NATUP.E AND CAUSES OF

BOOK dlre6l the fertility of nature towards the produdlion of the plants

u moft profitable to man. A field overgrown with briars and brambles

may frequently produce as great a quantity of vegetables as the
beft cultivated vineyard or corn field. Planting and tillage fre-
quently regulate more than they animate the a6live fertility of
nature ; and after all their labour, a great part of the work always
remains to be done by her. The labourers and labouring cattle,
therefore, employed in agriculture, not only occafion, like the
workmen in manufadures, the reprodu6lion of a value equal to
their own confumption, or to the capital which employs them,
together with its owners profits ; but of a much greater value. Over
and above the capital of the farmer and all its profits, they regu-
larly occafion the reproduction of the rent of the landlord. This
rent may be confidered as the produce of thofe powers of nature,
the ufe of which the landlord lends to the farmer. " It is greater
or fmaller according to the fuppofed extent of thofe powers, of,
in other words, according to the fuppofed natural or improved
fertility of the land. It is the work of nature which remains after
deducing or compenfating every thing which can be regarded as
the work of man. It is feldom lefs than a fourth, and frequently
more than a third of the whole produce. No equal quantity of
productive labour employed in manufactures can ever occafion fo
great a reproduction. In theni nature does nothing man does
all; and the reproduction muft always be in proportion to the
ftrength of the agents that occafion it. The capital employed in
agriculture, therefore, not only puts into motion a greater quantity
of productive labour than any equal capital employed in manu-
factures, but in proportion too to the quantity of productive labour
which it employs, it adds a much greater value to the annual pro-
duce of the land and labour of the countiy, to the real wealth
and revenue of its inhabitants. Of all the ways in which a
7 capital

THE WEALTH OF NATIONS.

capital can be employed, it is by far the moft advantageous to the
fociety.

The capitals employed in the agriculture and in the retail trade
of any fociety, mufl always refule within that fociety. Their em-
ployment is confined almoft to a precife fpot, to the farm, and
to the (hop ot the retailer. They muft generally too, though
there are fome exceptions to this, belong to refident members of
the fociety.

The capital of a wholefale merchant, on the contrary, feems
to have no fixed or neceffary refidence any-where, but may wander
about from place to place, according as it can either buy cheap or
fell dear.

The capital of the manufa6lurer muft no doubt refide where
the manufa6lure is carried on j but where this lhall be, is not always
neceffarily determined. It may frequently be at a great diftance
both from the place where the materials grow, and from that
where the compleat manufacture is confumed. Lyons is very dif--
tant both from the places which afford the materials of its manu-
fa6lures, and from thofe which confume them. The people of
fafhion in Sicily are cloathed in filks made in other countries, from
the materials which their own produces. Part of the wool of Spain
is manufa6lured in Great Britain, and fome part of that cloth is
afterwards fent back to Spain.

Whether the merchant whofe capital exports the furplus pro-
duce of any fociety be a native or a foreigner, is of very little im-
portance. If he is a foreigner, the number of their productive
labourers is neceffarily lefs than if he had been a native by one
man only; and the value of their annual produce, by the pro-

3 L 2 fits

443

CHAP.
V.

-Hi

444

THE NATURE AND CAUSES OF

BOOK fits of that one man. The fallors or carriers whom he employs
may ftill belong indifferently either to his country, or to their
country, or to fome third country, in the fame manner as if he had
rbeen a native. The capital of a foreigner gives a value to their
furplus produce equally with that of a native, by exchanging it for
Something for which there is a demand at home. It as efFeflually
replaces the capital of the perfon who produces that furplus, and as
.efFe6lualIy enables him to continue his bufinefs the fervice by which
the capital of a wholefale merchant chiefly contributes to fupport
the produ6live labour, and to augment the value of the annual
produce of the fociety to which he belongs.

It is of more confequence that the capital of the manufacturer
fhould refide within the country. It necefTarily puts into motion
a greater quantity of produ6live labour, and adds a greater value to
the annual produce of the land and labour of the fociety. It may,
however, be very ufeful to the country, though it fhould not refide
within it. The capitals of the Britifh manufacturers who work
up the flax^ and hemp annually imported from the coafts of the
Baltick, are furely very ufeful to the countries which produce them.
Thofe materials are a part of the furplus produce of thofe countries
which, unlefs it was annually exchanged for fomething which is
in demand there, would be of no value, and would foon ceafe to
be produced. The merchants who export it, replace the capitals of
the people who produce it, and thereby encourage them to continue
the production and the Britifh manufacturers replace the capitals
X)f thofe merchants.

A PARTICULAR country, in the fame manner as a particular
perfon, may frequently not have capital fufhcient both to improve
and cultivate all its lands, to manufacture and prepare their whole
jude produce for immediate ufe and confumption, and to tranfport

THE WEALTH OF NATIONS

the furplus part either of the rude or manufa6lured produce to C
thofe diftant markets where it can be exchanged for fomething fo^*
which there is a demand at home. The inhabitants of many
different parts of Great Britain have not capital fufficient to im-
prove and cultivate all their lands. The wool of the fouthern
counties of Scotland is, a great part of it, after a long land car-
riage through very bad roads, manufadlured in Yorkfliire, for want
of a capital to manufacture it at home. There are many little
manufacturing towns in Great Britain, of which the inhabitants
have not capital fufficient to tranfport the produce of their own
induftry to thofe diftant markets where there is demand and con-
fumption for it. If there are any merchants among them, they
are properly only the agents of wealthier merchants who refide
in fome of the greater commercial cities.

When the capital of any country is not fufficient for all thofe
three purpofes, in proportion as a greater fhare of it is employed in
agriculture, the greater will be the quantity of produ6live labour which
it puts into motion within the country; as will likewife be the value
which its employment adds to the annual produce of the land and
labour of the fociety. After agriculture, the capital employed in
manufactures put into motion the greateft quantity of productive
labour, and adds the greateft value to the annual produce. That
which is employed in the trade of exportation, has the leaft effeCl
of any of the three.

The country, indeed, which has not capital fufficient for all
thofe three purpofes, has not arrived at that degree of opulence
for which it feems naturally deftined. To attempt, however, pre-
maturely and with an infufficient capital, to do all the three, is
certainly not the ftiorteft way for a fociety, no more than it would
be for an individual, to acquire a fufficient one. The capital of

all

446

THE NATURE AND CAUSES OF

B O O K all the individuals of a nation, has its limits in the fame manner as
V--v~' that of a fingle individual, and is capable of executing only cer-
tain purpofes. The capital of all the individuals of a nation is
increafed in the fame manner as that of a fingle individual, by their
continually accumulating and addmg to it whatever they fave out
of their revenue. It is likely to increafe the fafteft, therefore,
when it is employed in the way that affords the greateft revenue
to all the inhabitants of the country, as they will thus be enabled
to make the greateft favings. But the revenue of all the inhabi-
tants of the country is necelTarily in proportion to the value of the
annual produce of their land and labour.

It has been the principal caufe of the rapid progrefs of our
American colonies towards wealth and greatnefs, that almo/l their
whole capitals have hitherto been employed in agriculture. They
have no manufa<5lures, thofe houfhold and coarfer manufactures
excepted which neceffarily accompany the progrefs of agriculture,
and which are the work of the women and childi en in every pri-
vate family. The greater part both of the exportation and coafting
trade of America, is carried on by the capitals of merchants who
refide in Great Britain. Even the ftores and warehoufes from
which goods are retailed in fome provinces, particularly in Vir-
ginia and Maryland, belong many of them to merchants who refide
in the mother country, and afford one of the few inftances of the
retail trade of a fociety being carried on by the capitals of thofe
who are not refident members of it. Were the Americans, either
by combination or by any other fort of violence, to ftop the im-
portation of European manufadures, and, by thus giving a mo-
nopoly to fuch of their own countrymen as could manufacture the
like goods, divert any confiderabie part of their capital into this
employment, they would retard inftead of acceleratmg the further
increafe in the value of their annual produce, and would obftru6l

inftead

THE WEALTH OP NATIONS

447

indead of promoting the progrefs of their country towards real CPr.\P.
wealth and greatnefs. This would be ftill more the cafe, were they u—
to attempt, in the fame manner, to monopolize to themfelves their
whole exportation trade.

The courfe of human profperity, indeed, feems fcarce ever to
have been of fo long continuance as to enable any great country
to acquire capital fufficient for all thofe three purpofes ; unlefs,
perhaps, we give credit to the wonderful accounts of the wealth
and cultivation of China, of thofe of antient Egypt, and of the
antient ftate of Indoftan. Even thofe three countries, the wealthieft,
according to all accounts, that ever were in the world, are chiefly
renowned for their fuperiority in agriculture and manufa6tures.
They do not appear to have been eminent for foreign trade. The
antient Egyptians had a fuperftitious antipathy to the fea j a fuper-
ftition nearly of the fame kind prevails among the Indians ; and the
Chinefe have never excelled in foreign commerce. The greater part
of the furplus produce of all thofe three countries feems to have
been always exported by foreigners, who gave in exchange for it
fomething elfe for which they found a demand there, frequently
gold and filver.

It is thus that the fame capital will in any country put into
motion a greater or fmaller quantity of productive labour, and
add a greater or fmaller value to the annual produce of its land and
labour, according to the different proportions in which it is em-
ployed in agriculture, manufactures, and wholefale trade. The
difference too is very great, according to the diflerent forts of v.'hoIe-
fale trade in which any part of it is employed.

All wholefale trade, all buying in order to fell again by whole-
fale, may be reduced to three different forts. The home trade, the
foreign trade of confumption, and the carrying trade. The home

trvide

THE NATURE AND CAUSES OF

trade is employed in purchafing in one part of the fame country,
and felling in another, the produce of the induftry of that country.
It comprehends both the inland and the coafting trade. The foreign
trade of confumption is employed in purchafmg foreign goods for
home confumption. The carrying trade is employed in tranf-
adling the commerce of foreign countiies, or in carrying the fur-
plus produce of one to another.

The capital which is employed in purchafing in one part of
the country in order to fell in another the produce of the induftry
of that country, generally replaces by every fuch operation two
diftinft capitals that had both been employed in the agriculture or-
manufa6lures of that country, and thereby enables them to con-
tinue that employment. When it fends out from the relidence of
the merchant a certain value of commodities, it generally brings
back in return at leaft an equal value of other commodities. When
both are the produce of domeftick induftry, it necelTarily replaces
by evei7 fuch operation two diftin6l capitals, which had both been
employed in fupporting produ61:ive labour, and thereby enables
them to continue that fupport. The capital which fends Scotch
manufa6lures to London, and brings back Englifti corn and
manufa6tures to Edinburgh, neceffarily replaces, by every fuch
operation, two Britifii capitals which had both been employed in
the agriculture or manufaflures of Great Britain.

The capital employed in purchafing foreign goods for home-
confumption, when this purchafe is made with the produce c^.
domeftick induftry, replaces too, by every fuch operation, two
diftin6l capitals; but one of them only is employed in fupporting
domeftick induftry. The capital which fends Britifti goods to
Portugal, and brings back Portuguefe goods to Great Britain, re-
places by every fuch operation only one Britifh capital. The other

is.

THE WEALTH OF NATIONS. r

is a Portuguefe one. Though the returns, therefore, of the CHAP,
foreign trade of confumption fhould be as quick as thofe of the
bome-trade, the capital employed in it will give but one-half the
encouragement to the induftry or produftive labour of the country.

But the returns of the foreign trade of confumption are very
feldom fo quick as thofe of the home-trade. The returns of the
home-trade generally come in before the end of the year, and
fometimes three or four times in the year. The returns of the
foreign trade of confumption feldom come in before the end of the
year, and fometimes not till after two or three years. A capital,
therefore, employed in the home-trade will fometimes make twelve
operations, or be fent out and returned twelve times, before a capi-
tal employed in the foreign trade of confumption has made one.
If the capitals are equal, therefore, the one will give four and
twenty times more encouragement and fupport to the induftry
of the country than the other.

The foreign goods for home-confumption may fometimes be
purchafed, not with the produce of domeftick induftry, but with
fome other foreign goods. Thefe laft, however, muft have been
purchafed. either immediately with the produce of domeftick
induftry, or with fomething elfe that had been purchafed with it ;
for the cafe of war and conqueft excepted, foreign goods can never
be acquired, but in exchange for fomething that had been produced
at home, either immediately, or after two or more different ex-
changes. The effedts, therefore, of a capital employed in fuch
a round about foreign trade of confumption, are, in every refpefl,
the fame as thofe of one employed in the moft dire6t trade of the
fame kind, except that the final returns are likely to be ftill more
diftant, as they muft depend upon the returns of two or three
diftinft foreign trades. If the flax and hemp of Riga are pur-
chafed with the tobacco of Virginia, which had been purchafed

Vol. I. 3 M with

THE NATURE AND CAUSES OF

with Britifli manufadures, the merchant muft wait for the returns
of two diftindl foreign trades before he can employ the fame ca-
pital in re-purchafmg a like quantity of Britifh manufactures.
If the tobacco of Virginia had been purchafed, not with Britifli
manufa6lures, but with the fugar and rum of Jamaica which had
been purchafed with thofe manufactures, he muft wait for the
returns of three. If thofe two or three diftinCl foreign trades
ftiould happen to be carried on by two or three diftinfl merchants,
of whom the fecond buys the goods imported by the firft, and the
third buys thofe imported by the fecond, in order to export 'them
again, each merchant indeed will in this ca{e receive the returns
of his own capital more quickly; but the final returns of the whole
capital employed in the trade will be juft as flow as ever. Whe-
ther the whole capital employed in fuch a round about trade
belong to one merchant or to three, can make no difference with
regard to the country, though it may with regard to the particu-
lar merchants. Three times a greater capital muft in both cafes
be employed, in order to exchange a certain value of Britifh ma-
nufactures for a certain quantity of flax and hemp, than would
have been neceflTary, had the manufactures and the flax and hemp
been direCtly exchanged for one another. The whole capital em-
ployed, therefore, in fuch a round about foreign trade of con-
fumption, will generally give lefs encouragement and fupport to the
productive labour of the country, than an equal capital employed
in a more direCt trade of the fame kind.

Whatever be the foreign commodity with which tlie foreign
goods for home-confumption are purchafed, it can occafion no
efl^ential difference eitlier in the nature of the trade, or in the en-
couragement and fupport which it can give to the productive labour
of the country from which it is carried on. If they are pur-
chafed with the gold of Brazil, for example, or with the filver

THE WEALTH OF NATIONS.

451

of Peru, this gold and filver, like the tobacco of Virginia, muft C p.
have been purchafed with fomething that either was the produce l.
of the induftry of the country, or that had been purchafed
with fomething elfe that was fo. So far, therefore, as the
produ6tive labour of the country is concerned, the foreign
trade of confumption which is carried on by means of gold and
filver, has all the advantages and all the inconveniencies of
any other equally round about foreign trade of confumption,
and will replace juft as faft or juft as flow the capital which is
imm^ediately employed in fupporting that produ6tive labour. It
feems even to have one advantage over any other equally round
about foreign trade. The tranfportation of thofe metals from
one '^lace to another, on account of their fmall bulk and great
value, is lefs expenfive than that of almofl: any other foreign goods
of equal value. Their freight is much lefs, and their infurance
not greater. An equal quantity of foreign goods, therefore, may
frequently be purchafed with a fmaller quantity of the produce
of domeftick induftry, by the intervention of gold and fdver, than
by that of any other foreign goods. The demand of the country
may frequently, in this manner, be fupplied more compleatly and
at a fmaller expence than in any other. Whether, by the con-
tinual exportation of thofe metals, a trade of this kind is likely
to impoverifh the country from which it is carried on, in any
other way, I fhall have occafion to examine at great length here-
after.

That part of the capital of any country which is employed in
the carrying trade, is altogether withdrawn from fupporting the
produ6live labour of that particular country, to fupport that of
fome foreign countries. Though it may replace by every operation
two diftin<5l capitals, yet neither of them belong to that particular
country. The capital of the Dutch merchant, which carries the
corn of Poland to Portugal, and brings back the fruits and wines

3 M 2 of

^54 THE NATURE AND CAUSES OF

BOOK of Portugal to Poland, replaces by every fuch operation two capitals,
neither of which had been employed in fupporting the produ6tive
labour of Holland j but one of them in fupporting that of Poland,
and the other that of Portugal. The profits only return regularly
to Holland, and conftitute the whole addition which this trade
neceflarily makes to the annual produce of the land and labour of
that country. When, indeed, the carrying trade of any particular
country is carried on with the fhips and failors of that country, that
part of the capital employed in it which pays the freight, is di-
llributed among, and puts into motion a certain number of pro-
ductive labourers of that country. Almoft all nations that have
had any confiderable ftiare of the carrying trade have, in fa6t,.
carried it on in this manner. The trade itfelf has probably de-
rived its name from it, the people of fuch countries being the
carriers to other countries. It does not, however, feem efTential
to tlie nature of the trade that it fhould be fo. A Dutch merchant
may, for example, employ his capital in tranfacling the commerce
of Poland and Portugal, by carrying part of the furplus produce
of the one to the other, not in Dutch, but in Britifh bottoms. .
It may be prefumed, that he a6lually does fo upon fome particular
occafions. It is upon this account, however, that the carrying
trade has been fuppofed peculiarly advantageous to fuch a country
as Great Britain, of which the defence and iecurity depend upon^
the number of its failors and fhipping. But the fame capital may-
employ as many failors and fhipping, either in the foreign trade>
of confumption, or even in the home-trade, when carried on by./
coafting veflels, as it could in the carrying trade. The number.^
of failors and fhipping which any particular capital can employ, ,
does not depend upon the nature of the trade, but partly upon;
the bulk of the goods in proportion to their value, and partly,
upon the diftance of the ports between which they arc to be car-
ried; chiefly upon the foimer of thofe two circumftances. The
coal- trade from Newcaftle to London, for example, employs more :

ibipping.;

THE WEALTH OF NATIONS

453

fhipping than all the carrying trade of England, though the ports C H^A P.
are at no great diftance. To force, therefore, by extraordinary v.,,,-v^^
encouragements, a larger fhare of the capital of any country into
the carrying trade, than what would naturally go to it, will not
always necelTarily increafe the (hipping of that country.

The capital, therefore, employed in the home-trade of any country
will generally give encouragement and fupport to a greater quantity
of produ6live labour in that country, and increafe the value of its
annual produce more than an equal capital employed in the foreign
trade of confumption : and the capital employed in this latter trade
has in both thefe refpe6ls a ftill greater advantage over an equal
capital employed in the carrying trade. The riches, and, fo far as
power depends upon riches, the power of every country, muft al-
ways be in proportion to the value of its annual produce, the fund
from which all taxes muft ultimately be paid. But the great obje6l
of the political oeconomy of every country, is to encreafe the
riches and power of that country. It ought, therefore, to give no
preference nor fuperior encouragement to the foreign trade of
confumption above the home-trade,, nor to the carrying trade
above either of the other two. It ought neither to force nor to
allure into either of thofe two channels, a greater fhare of the ca-
pital of the country than what would naturally flow into them of
its own accord;.

Each of thofe different branches of trade, however, is not
only advantageous, but neceffary and unavoidable, when the
courfe of things without any conftraint or violence naturally in*
troduces it. .

When the produce of any particular branch of induftry exceeds
what the. demand of the country requires, the furplus muft be

fent

454

THE NATURE AND CAUSES OF

B O^O K fent abroad, and exchanged for fomething for which there is a
v.— -y^ — I demand at home. Without fuch exportation, a part of the pro-
duftive labour of the country muft ceafe, and the value of its annual
produce diminifh. The land and labour of Great Britain produce
generally more corn, woollens, and hard ware, than the demand
of the home-market requires. The furplus part of them, there-
fore, muft be fent abroad, and exchanged for fomething for which
there is a demand at home. It is only by means of fuch ex-
portation, that this furplus can acquire a value fufficient to
compenfate the labour and expence of producing it. The neigh-
bourhood of the fea-coaft, and the banks of ail navigable rivers,
are advantageous fituations for induftry, only becaufe they facilitate
the exportation and exchange of fuch furplus produce for fome-
thing elfe which is more in demand there.

When the foreign goods which are thus purchafed with the fur-
plus produce of domeftick induftry exceed the demand of the home-
market, the furplus part of them muft be fent abroad again,
and exchanged for fomething more in demand at home. About
ninety- fix thoufand hogftieads of tobacco are annually purchafed
in Virginia and Maryland, with a part of the furplus produce
of Britifti induftry. But the demand of Great Britain does not
require, perhaps, more than fourteen thoufand. If the remaining
eighty-two thoufand, therefore, could not be fent abroad and ex-
changed for fomething more in demand at home, the importation
of them muft ceafe immediately, and with it the productive labour
of all thofe inhabitants of Great Britain, who are at prefent em-
ployed in preparing the goods with which thefe eighty -two thou-
fand hogtlieads are annually purchafed. Thofe goods, which are
part of the produce of the land and labour of Great Britain, having
no market at home, and being deprived of that which they had
abroad, muft ceafe to be produced. The moft round about foreign
7 trade

THE WEALTH OF NATIONS. 45

trade of confumption, therefore, may, upon fome occafions, be CHAP,
as necefTary for fupporting the produ6live labour of the country,
and the value of its annual produce, as the moft dire6l.

When the capital ftock of any country is increafed to fuch a
degree, that it cannot be all employed in fupplying the confump-
tion, and fupporting the produ6live labour of that particular coun-
try, the furplus part of it naturally difgorges itfelf into the carrying
trade, and is employed in performing the fame offices to other
countries. The carrying trade is the natural effect and fymptom
of great national wealth : but it does not feem to be the natural
caufe of it. Thofe ftatefmen who have been difpofed to favour
it with particular encouragements, feem to have miftaken the
effe6l and fymptom for the caufe. Holland, in proportion ta
the extent of the land and the number of its inhabitants, by far
the richeft country in Europe, has, accordingly, the greateft fhare
of the carrying trade of Europe. England, perhaps the fecond
richeft country of Europe, is likewife fuppofed to have a con-
fiderable fliare of it; though what commonly paffes for the carrying
trade of England, will frequently, perhaps, be found to be na
more than a round about foreign trade of confumption. Such,
are, in a great meafure, the trades which carry the goods of the
Eaft: and Weft: Indies, and of America, to diff^erent European
markets. Thofe goods are generally purchafed either immediately
with the produce of Britifti induftry, or with fomething elfe which
had been purchafed with that produce, and the final returns of
thofe trades are generally ufed or confumed in Great Britain. The
trade which is carried on in Britifli bottoms between the different
ports of the Mediterranean, and fome trade of the fame kind car-
ried on by Britifti merchants between the different ports of India,,
make, perhaps, the principal branches of what is properly the
carrying trade of Great Britain..

The

45^

THE NATURE AND CAUSES OF

B O O K The extent of the home-trade and of the capital which can be
>^-> employed in it, is neceflarily limited by the value of the furplus
produce of all thofe diftant places within the country which have
occafion to exchange their refpedlive produ6lions with one another.
That of the foreign trade of confumption, by the value of the fur-
plus produce of the whole country and of what can be purchafed
with it. That of the carrying trade, by the value of the furplus
produce of all the different countries in the world. Its poffible
extent, therefore, is in a manner infinite in comparifon of that
of the other two, and is capable of abforbing the greatefl ca-
pitals.

The confideration of his own private profit, is the fole motive
which determines the owner of any capital to employ it either in
agriculture, in manufa6lures, or in fome particular branch of the
wholefale or retail trade. The different quantities of produ6live
labour which it may put into motion, and the different values which
it may add to the annual produce of the land and labour of the
fociety, according as it is employed in one or other of thofe dif-
ferent ways, never enter into his thoughts. In countries, there-
fore, where agriculture is the mofl profitable of all employments,
and farming and improving the mofl dire6l roads to a fplendid
fortune, the capitals of individuals will naturally be employed in
the manner mofl advantageous to the whole fociety. The profits
of agriculture, however, feem to have no fuperiority over thofe of
other employments in any part of Europe. Proje6lors, indeed,
in every corner of it, have within thefe few years amufed the pub-
lick with mofl magnificent accounts of the profits to be made by
the cultivation and improvement of land. Without entering into
any particular difcuffion of their calculations, a very fimple ob-
fervation may fatisfy us that the refult of them mufl be falfe. We
fee every day the mofl fplendid fortunes that have, been acquired

4 in

THE WEALTH OF NATIONS.

457

in the courfe of a fingle life by trade and manufa6lures, frequently C HA P.
from a very fmall capital, fometimes from no capital. A fmgle u--v^
inftance of fuch a fortune acquired by agriculture in the fame
time, and from fuch a capital, has not, perhaps, occurred in
Europe during the courfe of the prefent century. In all the great
countries of Europe, however, much good land ftill remains un-^
cultivated, and the greater part of what is cultivated is far from
being improved to the degree of which it is capable. Agriculture,
therefore, is almoft every where capable of abforbing a much
greater capital than has ever yet been employed in it. What cir-
cumftances in the policy of Europe have given the trades which
are carried on in towns fo great an advantage over that which is
carried on in the country, that private perfons frequently find
it more for their advantage to employ their capitals in the mofl
diftant carrying trades of Afia and America, than in the improve-
ment and cultivation of the mofl: fertile fields in their own neigh-
bourhood, I fhall endeavour to explain at full length in the two
following books.

Vol. I.

( 459 )

BOOK nr.

of the different Progrefs of Opulence in different

Nations.

CHAP. I.

Of the natural Progrefs of Opulence*

TH E great commerce of every civilized fociety, is that carried CHAP,
on between the inhabitants of the town and thofe of the
country. It confifts in the exchange of rude for manufactured pro-
duce, either immediately, or by the intervention of money, or of
fome fort of paper which reprefents money. The country fupplies
•the town with the means of fubfiftence, and the materials of ma-
nufa6lure. The town repays this fupply by fending back a part
of the manufa6lured produce to the inhabitants of the country.
The town, in which there neither is nor can be any reproduction
of fubllances, may very properly be faid to gain its whole w^ealth
and fubfiftence from the country. We muft not, however, upon
this account, imagine that the gain of the town is the lofs of the
country. The gains of both are mutual and reciprocal, and the
divifion of labour is in this, as in all other cafes, advantageous to
all the different perfons employed in the various occupations into
which it is fubdivided. The inhabitants of the country purchafe of
the town a greater quantity of manufactured goods, with the pro-
duce of a much fmaller quantity of their own labour, than they
muft have employed had they attempted to prepare them themfelves.
The town affords a market for the furplus produce of the country,

3 N 2 or

THE NATURE AND CAUSES OF

K or what is over and above the maintenance of the cultivators, and
it is there that the inhabitants of the country exchange it for fome-
thing elfe which is in demand among them. The greater the num-
ber and revenue of the inhabitants of the town, the more extenfive
is the market which it affords to thofe of the country ; and the more
extenfive that market, it is always the more advantageous to a great
number. The corn which grows within a mile of the town, fells
there for the fame price with that which comes from twenty miles
diftance. But the price of the latter muft generally, not only pay
the expence of raifmg and bringing it to market, but afford too
the ordinary profits of agriculture to the farmer. The proprietors
and cultivators of the country, therefore, which lies in the
neighbourhood of the town, over and above the ordinary profits
of agriculture, gain, in the price of what they fell, the whole value
of the carriage of the like produce that is brought from more diftant
parts, and they fave, befides, the whole value of this carriage in
the price of what they buy. Compare the cultivation of the lands
in the neighbourhood of any confiderable town, with that of thofe
which lie at fome diftance from i!, and you will eafily fatisfy
yourfelf how much the countiy is benefited by the commerce of the
town. Among all the abfurd fpeculations that have been pro-
pagated concerning the balance of trade, it has never been pretended
that either the country lofes by its commerce with the town, or
the town by that with the country which maintains it.

As fubfiftence is, in the nature of things, prior to conveniency
and luxury, fo the induftry v/hich procures the former, muft
neceflarily be prior to that v/hich minifters to the latter. The
cultivation and improvement of the country, therefore, which
affords fubfiftence, muft, necelTarily, be prior to the increafe of
the town, which furnifties only the means of conveniency and luxury.
It is the furplus produce of the country only, or what is over and

above

THE WEALTH OF NATIONS

461

above the maintenance of the cuhivators, that conftltutes the fubfift- CHAP,
ence of the town, which can therefore increafe only with the increafe w-V-— ^
of this furplus produce. The town, indeed, may not always derive
its whole fubfiftence from the country in its neighbourhood, or even
from the territory to which it belongs, but from very diftant coun-
tries ; and this, though it fornis no exception from the general
rule, has occafioned confiderable variations in the progrefs of
opulence in different ages and nations.

That order of things which neceflity impofes in general, though
not in every particular country, is, in every particular country,
promoted by the natural inclinations of man. If human inftitu-
tions had never thwarted thofe natural inclinations, the towns
could no where have increafed beyond what tlie improvement and
cultivation of the territory in which they were fituated could fup-
port ; till fuch time, at leaft, as the whole of that territory was
completely cultivated and improved. Upon equal, or nearly equal
profits, moft men will chufe to employ their capitals rather in the
improvement and cultivation of land, than either in manufactures
or in foreign ti'ade. The man who employs his capital in land,
has it more under his view and command, and his fortune is much
lefs Hable to accidents than that of the trader, who is obliged fre-
quently to commit it, not only to the winds and the waves, but
to the more uncertain elements of human folly and injuflice, by
giving great credits in diftant countries to men, with whofe cha-
ra6ler and fituation he can feldom be thoroughly acquainted.
The capital of the landlord, on the contrary, which is fixed in the
improvement of his land, feems to be as well fecu red as the nature
of human affairs can admit of. The beauty of the country befides,
the pleafures of a country life, the tranquillity of mind which it
piomifes, and wherever the injuftice of human laws does not
diflurb it, the independency which it really affords, have charms,

that;

Ill

^.62 THE NATURE AND CAUSES OF

B 0 0 K that more or lefs attract every body j and as to cultivate the ground
^ was the original deftination of man, fo in every ftage of his
«xiftence he feems to retain a prediledlion for this primitive
employment.

Without the afliftance of feme artificers, indeed, the cul-
tivation of land cannot be carried on, but with great incon-
veniency and continual interruption. Smitlis, carpenters, wheel-
wrights, and plough-wrights, mafons, and bricklayers, tanners,
ihoemakers, and taylors, are people, whofe fervice the farmer
has frequent occafion for. Such artificers too ftand, occafionally,
in need of the affiftance of one another ; and as their refidence is
not, like that of the farmer, necefiarily tied down to a precife
fpot, they naturally fettle in the neighbourhood of one another,
and thus form a fmall town or village. The butcher, the brewer,
and the baker, foon join them, together with many other artificers
and retailers, neceffary or ufeful for fupplying their occafional
wants, and who contribute ftill further to augment the town.
The inhabitants of the town and thofe of the country are,
mutually, the fervants of one another. The town is a continual
fair or market, to which the inhabitants of the comitry refort
in order to exchange their rude for manufactured produce. It
is this commerce which fupplies the inhabitants of the town both
with the materials of their work, and the means of their fubfiftence.
The quantity of the finifiied work which they fell to the in-
habitants of the country, necefiarily regulates the quantity of the
materials and provifions which they buy. Neither their employ-
ment nor fubfiftence, therefore, can augment, but in proportion to
the augmentation of the demand from the country for finifiied
work ; and this demand can augment only in proportion to tlie
extenfion of improvement and cultivation. Had human inftitu-
tions, therefore, never dijfturbed the natural courfe of things, the
7 progreflive

THE WEALTH OF NATIONS

463

progreflive wealth and increafe of the towns would, in every CHAP,
political fociety, be confequential, and in proportion to the im- w-k—mI
provement and cultivation of the territory or country.

In our North American colonies, where uncultivated land
is ftill to be had upon eafy terms, no manufa6lures for diftant fale
have ever yet been eflabliOied in any of their towns. When aa
artificer has acquired a little more ftock than is necclTary for
carrying on his own bufinefs in fupplying the neighbouring country,
he does not, in North America, attempt to eftablifh with it a,
manufadure for more diftant fale, but employs it in the purchafe
and improvement of uncultivated land. From artificer he be-
comes planter, and neither the large wages nor the eafy fubfiftence
which that country affords to artificers, can bribe him ratlier to work
for other people than for himfelf. He feels that an artificer is the
fervantof his cuftomers, from whom he derives his fubfiftence; but
that a planter who cultivates his own land, and derives his necefi^ary^
fubfiftence from the labour of his own family, is really a mafter^
and independent of all the world.

In countries, on the contrary, where there is either no un-
'eultivated land, or none that can be had upon eafy terms, every
artificer who has acquired more ftock than he can employ in the
©ccafional jobs of the neighbourhood, endeavours to prepare
work for more diftant fale. The. fmith ereds fome fort of
iron, the weaver fome fort of linen or woollen manufadlory. ,
Thofe different manufadlures come, in procefs of time, to be.
gradually fubdivided, and thereby improved and refined in a;
.great variety of ways, which may eafily be conceived, and which.--
it is therefore unnecefiTary to explain any further.

-4'

THE NATURE AND CAUSES OF

In feeking for employment to a capital, manufa6lures are, upon
equal or nearly equal profits, naturally preferred to foreign
commerce, for the fame reafon that agriculture is naturally
preferred to manufa6lures. As the capital of the landlord
or farmer is more fecure than that of the manufacturer, fo
the capital of the manufa6lurer, being at all times more within
his view and command, is more fecure than that of the foreign
merchant. In every period, indeed, of every fociety, the furplus
part both of the rude and manufactured produce, or that for which
there is no demand at home, muft be fent abroad in order to
te exchanged for fomething for which there is fome demand
at home. But whether the capital, which carries this furplus
produce abroad, be a foreign or a domeftick one, is of very
little importance. If the fociety has not acquired fufficient capital
both to cultivate all its lands, and to manufacture in the com-
pleateft manner the whole of their rude produce, there is even
a confiderable advantage that it fhould be exported by a foreign
capital, in order that the whole flock of the fociety may be
employed in more ufeful purpofes. The wealth of ancient Egypt,
that of China and Indoftan, fufiiciently demonftrate that a
nation may attain a very high degree of opulence, though
the greater part of its exportation trade be carried on by
foreigners. The progrefs of our North American and Weft
Indian colonies would have been much lefs rapid, had no capital
but what belonged to themfelves been employed in exporting their
furplus produce.

According to the natural courfe of things, therefore, the
greater part of the capital of every growing fociety is, firft,
directed to agriculture, afterwards to manufactures, and laft
of all to foreign commerce. This order of things is fo very
natural, that in every fociety that had any territory, it has

always.

THE WEALTH OF NATIONS.

465

always, I believe, been in fome degree obferved. Some of their CHAP,
lands muft have been cultivated before any confiderable towns u— v-^.
could be eftablifhed, and fome fort of coarfe induftry of the
manufaduring kind muft have been carried on in thofe towns,
before they could well think of employing themfelves in foreign
commerce.

But though this natural order of tilings muft have taken place
in fome degree in every fuch fociety, it has, in all the modern
ftates of Europe, been, in many refpe6ls, intirely inverted. ~
The foreign commerce of fome of their cities has introduced all
their finei* manufaftures, or fuch as were fit for diftant fale ;
and manufa<5tures and foreign commerce together, have given
birth to the principal improvements of agriculture. The manners
and cuftoms which the nature of their original government in-
troduced, and which remained after that government was greatly
altered, neceflarily forced them into this unnatural and retro- ^
grade order.

Vox. I.

466

THE NATURE AND CAUSES OF

CHAP. II.

Of the Dtfcoiiragement of Agriculture in the antient State of Europe
after the Fall of the Roman Empire,

BOOK TTTHEN the German and Scythian nations over- ran the
III. ^ ^ '

weftern provinces of the Roman empire, the confufions
which followed fo great a revolution lafted for feveral centuries.
The rapine and violence which the barbarians exercifed againft
the antient inhabitants, interrupted the commerce between the
towns and the country. The towns were deferted, and the country
was left uncultivated, and the weftern provinces of Europe, which
had enjoyed a confiderable degree of opulence under the Roman
empire, funk into the lowed ftate of poverty and barbarifm.
During the continuance of thofe confufions, the chiefs and princi-
pal leaders of thofe nations, acquired or ufurped to themfelves the
greater part of the lands of thofe countries. A great part of
them was uncultivated j but no part of them, whether cultivated
or uncultivated, was left without a proprietor. All of them were
engrofTed, and the greater part by a few great proprietors.

This original engrolling of uncultivated lands, though a greats
migbt have been but a tranfitory evil. They might foon have
been divided again, and broke into fmall parcels either by fuc-
ceihon or by alienation. The law , of primogeniture hindered them
from being divided by fucceflfion i the introdu6lion of entails pre-
vented their being broke into fmall parcels by alienation.

When land, like moveables, is confidered as the means only
of fubiiilence and enjoyment, the natural law of fuccefTion divides

it.

THE WEALTH OF NATIONS.

it, like them, among all the children of the family; of all of CHAP,
whom the fubfiftence and enjoyment may be fuppofed equally dear y,^^ — ->
to the father. This natural law of fucceflion accordingly took place
among the Romans, who made no more diftin6lion between elder
and younger, between male and female, in the inheritance of
lands, than we do in the diftribution of moveables. But when land
was confidered as the means, not of fubfiftence merely, but of
power and prote<5lion, it was thought better that it fhould defcend
undivided to one. In thofe diforderly times, every great landlord
was a fort of petty prince. His tenants were his fubjecls. He
was their judge, and in fome refpe6ls their legiftator in peace, and
their leader in war. He made war according to his own difcretion,
frequently againft his neighbours, and fometimes againft his fove-
reign. The fecurity of a landed eftate, therefore, the protection
which its owner could afford to thofe who dwelt on it, depended
upon its greatnefs. To divide it was to ruin it, and to expofe every
part of it to be oppreffed and fwallowed up by the incurfions of
its neighbours. The; law of primogeniture, therefore, came to
take place, not immediately, indeed, but in procefs of time, in
the fucceflion of landed eftates, for the fame reafon that it has
generally taken place in that of monarchies, though not always at
their firft inftitution. That the power, and confequently the fecu-
rity of the monarchy, may not be weakened by divifion, it muft
defcend entire to one of the children. To which of them fo im-
portant a preference lhall be given, muft be determined by fome
general rule, founded not upon the doubtful diftinftions of per-
fonal merit, but upon fome plain and evident ditference which can
admit of no difpute. Among the children of the fame family,
there can be no indifputable difference but that of fex, and that
of age. The male fex is univerfally preferred to the female ; and
when all other things are equal, the elder every where takes place

3 O 2 of

THE NATURE AND CAUSES OF

K of the younger. Hence the origin of the right of primogeniture,
and of what is called lineal fucceflion.

Laws frequently continue in force long after the circumftances,
which firft gave occafion to them, and which could alone render
them reafonable, are no more. In the prefent ftate of Europe,
the proprietor of a fingle acre of land is as perfe6^:ly fecure of his
poffeflion as the proprietor of a hundred thoufand. The right of
primogeniture, however, ftill continues to be refpefled, and as
of all inftitutions it is the fitteft to fupport the pride of family
diftin6lions, it is ftill likely to endure for many centuries. In
every other refpe61:, nothing can be more contrary to the real in-
tereft of a numerous family, than a right which, in order to enrich
one, beggars all the reft of the children.

Entails are the natural confequences of the law of primo-
geniture. They were introduced to preferve a certain lineal fuc-
ceffion, of which the law of primogeniture firft gave the idea,
and to hinder any part of the original eftate from being carried out
of the propofed Hne either by gift, or devife, or alienation ; either
by the folly, or by the misfortune of any of its fucceflive owners-.
They were altogether unknown to the Romans. Neither their
fubftitutions nor fideicommilTes bear any refemblance to entails,
though fome French lawyers have thought proper to drefs the
modern inftitution in the language and form of thofe antient
ones.

When great landed eftates were a fort of principalities, entails
might not be unreafonable Like what are called the fundamental '
laws of fome monarchies, they might frequently hinder the fecurity
of thoufands from being endangered by the caprice or extravagance
of one man. But in the prefent ftate of Europe, v/hen fmall as
7 well

THE WEALTH OF NATIONS.

well as great eftates derive their fecurity from the laws of their
Country, nothing can be more compleatly abfurd. They are
founded upon the moft abfurd of all fuppofitions, the fuppofition
that every fucceffive generation of men have not an equal right
to the earth, and to all that it pofTefTes ; but tliat the property of
the prefent generation fhould be retrained and regulated according
to the fancy of thofe who died perhaps five hundred years ago.
Entails, however, are ftill refpe6ted through the greater part of
Europe, in thofe countries particularly in which noble birth is
a neceflary quaUfication for the enjoyment either of civil or military
honours. Entails are thought necelTary for maintaining this ex-
clufive privilege of the nobihty to the great offices and honours
of their country; and that order having ufurped one unjuft ad-
vantage over the reft of their fellow citizens, left their poverty
fhould render it ridiculous, it is thought reafonable that they ftiould
have another. The common law of England, indeed, is faid to
abhor perpetuities, and they are accordingly more reftrifled there
than in any other European monarchy ; though even England is
not altogether without them. In Scotland more than one-fifth,
perhaps more than one-third part of the whole lands of the country,
are at prefent under ftri6l entail.

Great tra6ls of uncultivated land were, in this manner, not
only engrolTed by particular families, but the poffibility of their
being divided again was as much as poffible precluded forever.
It feldom happens, however, that a great proprietor is a great
improver. In the diforderly times which gave birth to thofe bar-
barous inftitutions, the great proprietor was fufficiently employed
in defending his own territories, or in extending his jurifdiction
and authority over thofe of his neighbours. He had no leifure to
attend to the cultivation and improvement of land. When the
eftablifliment of law and order afforded him this leifure, he often
wanted the inclination, and almoft ahvays the requifite abilities. If

the

70 THE NATURE AND CAUSES OF

B O O K the expence of his houfe and perfon either equalled or exceeded
— his revenue, as it did very frequently, he had no ftock to
employ in this manner. If he was an osconomift, he generally
found it more profitable to employ his annual favings in new
purchafes, than in the improvement of his old eftate. To im-
prove land with profit, like all other commercial projedls, re-'
quires an exact attention to fmall favings and fmall gains, of which'
a man born to a great fortune, even though naturally frugal, is
very feldom capable. The fituation of fuch a perfon naturally
dlfpofes him to attend rather to ornament which pleafes his fancy,
than to profit for which he has fo little occafion. The elegance of
his drefs, of his equipage, of his houfe, and houfhold furniturlti
are objefts which from his infancy he has been accuftomed to have
fome anxiety about. The turn of mind which this habit natu-
rally forms, follov/s him when he comes to think of the improvc-i'
ment of land. He embellifties perhaps four or five hundred acres
in the neighbourhood of his houfe, at ten times the expence which
the land is worth after all his improvements ; and finds that if
he was to improve his whole eflate in the fame manner, and he
has little tafte for any other, he would be a bankrupt before he
had finiflied the tenth part of it. There ftill remain in both parts
of the united kingdom fome great eftates which have continued
without interruption in the hands of the fame family fince the
times of feudal anarchy. Compare the prefent condition of thofe
eftates with the polTeflions of the fmall proprietors in their neigh-
bourhood, and you will require no other argument to convince
you how unfavourable fuch extenfive property is to improve-
ment.

If little improvement was to be expe6ted from fuch great pro-
prietors, ftill lefs was to be hoped for from thofe who occupied
the land under them. In the antient ftate of Europe, the occupiers
of land were all tenants at will. They were all or almoft all flaves;

^ but

THE WEALTH OF NATIONS,

h\it their flavery was of a milder kind than that known among C HA P.
the antient Greeks and Romans, or even in our Weft: Indian colo- u —
nies. -They were fuppofed to belong more dire6lly to the land
than to their mafter. They could, therefore, be fold with it,
but not feparately. They could marry, provided it was with the
confent of their mafter; and he could not afterwards dilTolve the
marriage by felling the man and wife to different perfons. If he
maimed or murdered any of them, he was liable to fome penalty,
though generally but to a fmall one. They were not, however*
capable of acquiring property. Whatever they acquired was ac-
quired to their maft:er, and he could take it from them at pleafure.
Whatever cultivation and improvement could be carried on by m.eans
of fuch flaves, was properly carried on by their mafter. It was
at his expence. The feed, the cattle, and the inftiruments of
hufljandry were all his. It was for his benefit. Such flaves could
acquire nothing but their daily maintenance. It was properly the
proprietor himfelf, therefore, that, in this cafe, occupied his own
lands, and cultivated them by his own bondmen. This fpecies of
flavery fl:ill fubfifl:s in Ruflia, Poland, Hungary, Bohemia, Mo-
ravia, and other parts of Germany. It is only in the weft:eni and
fouth-weftern provinces of Europe, that it has gradually been
aboliflied altogether.

But if great improvements are feldom to be €'xpe61:ed from
great proprietoi's, they are leafl: of all to be expedled when they
employ flaves for their workmen. The experience of all ages and
nations, I beheve, demonfl:rates that the work done by flaves,
though it appears to cofl: only their maintenance, is in the end the
deareft: of any. A perfon who can acquire no property, can have
no other intereft: but to eat as much, and to labour as little as pof-
fible. Whatever work he does beyond what is fufficient to pur-
chafe his own maintenance, can be fqueezed out of him by vio-
lence only, and not by any intereft of his own. In antient Italy,

Vol. I. 3 ^ ^

THE NATURE AND CAUSES OF

BOOK how much the cultivation of com degenerated, how unprofitable

III •
i„.,,,y^ it became to the mafter when it fell under the management of

Haves, is remarked by both Pliny and Columella. In the time
of Ariftotle it had not been much better in antient Greece. Speak-
ing of the ideal republic defcribed in the laws of Plato, to main-
tain five thoufand idle men (the number of warriors fuppofed
neceflary for its defence) together with their women and fervants,
would require, he fays, a territory of boundlefs extent and fertility,
like the plains of Babylon.

The pride of man makes him love to domineer, and nothing
mortifies him fo much as to be obliged to condefcend to perfuade his
inferiors. Wherever the law allows it, and the nature of the work
can afford it, therefore,, he will generally prefer the fervice of flaves
to that of freemen. The planting of fugar and tobacco can afford
the ex-pence of flave-culdvation. The raifing of corn, it feems,
ill the preient times, cannot. In the Englifh colonies, of which
the principal produce is corn, the far greater part of the work is
done by freemen. The late refolution of the quakers in Penfyl-
vania to fet at liberty all their negroe flaves, may fatisfy us that
their number cannot be very great. Had they made any confiderable
part of their property, fuch a refolution could never have been
agreed to. In our fugar colonies, on the contrary, the whole work
is done by flaves, and in our tobacco colonies a very great part of
it. The profits of a fugar-plantation in any of our Weft Indian
•colonies aj-e generally much greater than thofe of any other cul-
tivation that is known either in Europe or America : And the profits
of a tobacco plantation, though inferior to thofe of fugar, are
fuperior to thofe of corn, as has already been obferved. Both can
afford the expence of ilave-cultivation, but fugar can afford it ftill
better than tobacco. The number of negroes accordingly is much
greater, in proportion to that of whites, in our fugar than in our
tobacco colonies.

6 To

THE WEALTH OF NATIONS.

473

To the flave cultivators of antient times, gradually fuccecded CHAP,
a fpecies of farmers known at prefent in France by the name of i^^H
Metayers. They are called in Latin Coloni Partiarii. They have
been fo long in difufe in England that at prefent I know no Englifli
name for them. The proprietor furniflied them with the feed,
cattle, and inftruments of hufbandry, the whole ftock, in ftiort,
neceflary for cultivating the farm. The produce was divided
equally between the proprietor and the farmer, after fetting afide
what was judged neceffary for keeping up the ftock, which was re-
ftored to the proprietor when the farmer either quitted or was
turned out of the farm.

Land occupied by fuch tenants is properly cultivated at the
expence of the proprietor, as much as that occupied by flaves.
There is, however, one very elTential difference between them.
Such tenants, being freemen, are capable of acquiring property,
and having a certain proportion of the produce of the land, they
have a plain intereft tha^t the whole produce fhould be as great as
pofTible, in order that their own proportion may be fo. A flave,
on the contrary, who can acquire nothing but his maintenance,
confults his own eafe by making the land produce as little as pof-
fible, over and above that maintenance. It is probable that it was
partly upon account of this advantage, and partly upon account
of the encroachments which the fovereign, always jealous of the
great lords, gradually encouraged their villains to make upon their
authority, and which feem at laft to have been fuch as rendered
this fpecies of fervitude altogether inconvenient, that tenure in
villanage gradually wore out through the greater part of Europe.
The time and manner, however, in which fo important a revo-
lution was brought about, is one of the moft obfcure points in
modern hiftory. The church of Rome claims great merit in it j
and it is certain that fo early as the twelfth century, Alexander III.

• Vol. I. 3 P publifhed

47+

THE NATURE AND CAUSES OF

^ ^ publifhed a bull for the general emancipation of flaves. It feems,
^ however, to have been rather a pious exhortation, than a law ta
which exaft obedience was required from the faithful. Slavery
continued to take place almoft univerfally for feveral centuries after-
wards, till it was gradually abolifhed by the joint operation of the
two interefts above mentioned, that of the proprietor on the one
hand, and that of the fovereign on the other. A villain enfran-
chifed, and at the fame time allowed to continue in pofleflion of
the land, having no flock of his own, could cultivate it only by
means of what the landlord advanced to him, and muft, therefore,,
have been what the French call a Metayer.

It could never, however, be the intereft even of this laft fpecies
of cultivators to lay out in the further improvement of the land,
any part of the Httle ftock which they might fave from their own
fhare of the produce, becaufe the lord, who laid out nothing, was
to get one-half of whatever it produced. The tithe, which is but
a tenth of the produce, is found to be a very great hinderance to
improvement. A tax, therefore, which amounted to one half,
muft have been an effedual bar to. it. It might be the intereft of
a metayer to make the land produce as much as could be brought
out of it by means of the ftock furnifhed by the proprietor : but
it could never be his intereft to mix any part of his own with
it. In France, where five parts out of fix of the whole kingdom,
are faid to be ftill occupied by this fpecies of cultivators, the pro-
prietors complain that their metayers take every opportunity of
employing the mafters cattle rather in carriage than in cultivation.;,
becaufe in the one cafe they get the whole profits to themfelves, in
the other they fhare them with their landlord. This fpecies of
tenants ftill fubfifts in fome parts of Scotland. They are called
i^eel-bow tenants. Thofe antient Englifh tenants, who are faid
by chief Baron Gilbert and Dodlor Blackftone to have been rather

7 bailiffs

THE WEALTH OF NATIONS.

bailifFs of the landlord than farmers properly fo called, were pro-
bably of the fame kind.

To this fpecies of tenancy fucceeded, though by very flow
degrees, farmers properly fo called, who cultivated the land with
their own ftock, paying a rent certain to the landlord. When fuch
farmers have a leafe for a term of years, they may fometimes find
it for their intereft to lay out part of their capital in the further
improvement of the farm ; becaufe they may fometimes expefl to
recover it, with a large profit, before the expiration of the leafe.
The pofleffion even of fuch farmers, however, was long extreamly
precarious, and ftill is fo in many parts of Europe. They could
before the expiration of their term be legally outed of their leafe,
by a new purchafer ; in England, even by the fi6litious aftion of a
common recovery. If they were turned out illegally by the violence
of their mafter, the a6lion by which they obtained redrefs was ex-
treamly imperfed. It did not always re-inflate them in the pof-
fefiion of the land, but gave them damages which never amounted
to the real lofs. Even in England, the country perhaps of Europe
where the yeomanry has always been moft refpe6led, it was not
till about the 14th of Henry the Vllth that the a6lion of ejeflment
was invented, by which the tenant recovers, not damages only but
pofleflion, and in which his claim is not neceflarily concluded by
the uncertain decifion of a fmgle affize. This action has been
found fo effeftual a remedy that, in the modern pra6lice, when the
landlord has occafion to fue for the pofreffion of the land, he feldom
makes ufe of the a6lions which properly belong to him as landlord,
the writ of right or the writ of entry, but fues in the name of
his tenant, by the writ of ejeftment. In England, therefore, the
fecurity of the tenant is equal to that of the proprietor. In
England befides a leafe for life of forty fliillings a year value is a
freehold, and entitles the leflTee to vote for a member of parliament ;

3 P 2 and

THE NATURE AND CAUSES OF

K and as a great part of the yeomanry have freeholds of this kind>
•J the whole order becomes refpeclable to their landlords on account
of the pohtical confideration which this gives them. There is, I
believe, nowhere in Europe, except in England, any inftance of
the tenant building upon the land of which he had no leafe, and
trufting that the honour of his landlord would take no advantage
of fo important an improvement. Thofe laws and cuftoms fo
favourable to the yeomanry, have perhaps contributed more to the
prefent grandeur of England than all their boafled regulations of
commerce taken together..

The law which fecures the longeft leafes againft fucceflbrs of
every kind is, fo far as I know, peculiar to Great Britain. It was
introduced into Scotland fo early as 1449, by a law of James the Ild. .
Its beneficial influence, however, has been much obftru6ted by
entails; the heirs of entail being generally reflrained from letting
leafes for any long term of years, frequently for more than one:
year. A late a6l of parliament has, in this relpe6t, fomewhat
llackened their fetters, though they are flill by much too fl:rait»
In Scotland, befides, as no leafehold gives a vote for a member. of
parliament, the yeomanry are upon this account lefs relpe^table to-
their landlords than in England.

In other parts of Europe, after it was found convenient to fecure
tenants both againft heirs and purchafers, the term of their fecurity
was ftill limited to a very ftiort period i in France, for example,
to nine years from the commencement of the leafe. It has in that,
country, indeed, been lately extended to twenty feven, a period
ftill too ftiort to encourage the tenant to make the moft important,
improvements. The proprietors of land were antiently the legis-
lators of every part of Europe. The laws relating to land, there--
fore, were all calculated for what they fuppofed the intereft of the
proprietor. It was for his intereft, they had imagined, that no

4 leafe

THE WEALTH OF NATIONS

477

Ibafe granted by any of his predeceflbrs fliould hinder him from C HA P.
enjoying, during a long term of years, the full value of his land. ^ -I-— ■»
Avarice and injuftice are always fhort-fighted, and they did not
forefee how much this regulation muft obftru6t improvement, and
thereby hurt in the long run the real intereft of the landlord.

The farmers toOj befides paying the rent, were antiently, it
was fuppofed, bound to perform a great number of fervices to>
the landlord, which were feldom either fpecified in the leafe, or'
regulated by any precife rule, but by the ufe and wont of the
manor or barony. Thefe fervices, therefore, being almoft en-
tirely arbitrary, fubje6led the tenant to many vexationSi In Scot-
land the abolition of all fervices, not precifely ftipulated in the
leafe, has in the courfe of a few years very much altered for ths^
better the condition of the yeomanry of that country.

The publick fervices to which the yeomanry were bound, were
not lefs arbitrary than the private ones. To make and maintain,
the high roads, a fervitude which ftill fubfifts, I believe, every
where, though with different degrees of oppreflion in different
countries, was not the only one. When the king's troops, when
his houfhold or his officers of any kind pafl'ed through any part of
the country, the yeomanry were bound to provide them with horfes,.
carriages, and provifions, at a price regulated by the purveyor.
Great Britain is, I believe, the only monarchy in Europe where
the oppreffion of purveyance has been entirely abohflied.. ItftiU.
fubfifts in France and Germany.

The publick taxes to which they were fubje61: were as irregular-
and opprelTive as the fervices. The antient lords, though extreamly ■
■unwilling to grant themfelves any pecuniary aid to their fovereign,
eafily allowed him to tallage, as they called it, their tenants, and-

hadi

THE NATURE AND CAUSES OF

K had not knowledge enough to forefee how much this muft in the
J £nd affe6l their own revenue. The taille, as it ftill fubfifts in France*
may Terve as an example of thofe antient tallages. It is a tax upon
the fuppofed profits of the farmer, which they eftimate by the
flock that he has upon the farm. It is his intereft, therefore, to
appear to have as little as poflible, and confequently to employ as
little as poflible in its cultivation, and none in its improvement.
Should any ftock happen to accumulate in the hands of a French
farmer, the taille is almoft equal to a prohibition of its ever being
€mploy€d upon the land. This tax befides is fuppofed to diflionour
whoever is fubje6l to it, and to degrade him below, not only
the rank of a gentleman, but that of a burgher, and whoever
rents the lands of another becomes fubje6l to it. No gentleman
nor even any burgher that has ftock will fubmit to this degradation.
This tax, therefore, not only hinders the ftock which accumulates
upon the land from being employed in its improvement, but drives
away all other ftock from it. The antient tenths and fifteenths, fo
ufual in England in former times, feem, fo far as they affe6led the
land, to have been taxes of the fame nature with the taille.

^ Under all thefe difcouragements, little improvement could be
expelled from the occupiers of land. That order of people, with
all the liberty and fecurity which law can give, muft always improve
tinder great difadvantages. The farmer compared with the pro-
prietor, is as a merchant who trades with borrowed money com--
pared with one who trades with his own. The ftock of both may
improve, but that of the one, with only equal good conduct, muft
always improve more flowly than that of the other, on account of
, the large lhare of the profits which is confumed by the intereft of
' the loan. The lands cultivated by the farmer muft, in the fame
^manner, with only equal good condu61:, be improved more flowJy
than thofe cultivated by the proprietor ; .on account of the large

ftiare

THE WEALTH OF NATIONS. « 47c

fhare of the produce which is confumed in the rent, and which> had C HA P.
the farmer been proprietor, he might have employed in the further ■*
improvement of the land. The ftation of a farmer befides is, from
the nature of things, inferior to that of a proprietor. Through
the greater part of Europe the yeomanry are regarded as an infe-
rior rank of people, even to the better fort of tradefmen and
mechanics, and in all parts of Europe to the great merchants and
mafter manufa6lurers. It can feldom happen, therefore, that a
man of any confiderable ftock lliould quit the. fuperior in order
to place himfelf in an inferior ftation. Even in the prefent ftatc
of Europe, therefore, little ftock is likely to go from any other pro- •
feflion to the improvement of land in the way of farming. More'
does perhaps in Great Britain than in any other country, though
even there the great ftocks which are, in fome places, employed
in farming, have generally been acquired by farming, the trade^^.
perhaps, in which of all others ftock is comaionly acquired moft
(towly. After fmall proprietors, however, rich and great far-
mers are, in eveiy country, the principal improvers. There are
more fueh perhaps in England than in any other Europeaa
monarchy. In the republican governments of Holland and of
Berne in Switzerland,, the farmers are faid to be not inferior to thofe
of England.

The antient policy of Europe was, over and above all this,
unfavourable to the improvement and cultivation of land, whethec
carried on by the proprietor or by the farmer ; firft, by the general
prohibition of the exportation of corn without a fpecial licence,,
which feems to have been a very univerfal regulation and fecondly,.
by the reftraints which were laid upon the inland commerce, not only
of corn but of almoft every other part of the produce of the
farm, by the abfurd laws againft engroflers, regrators, and fore-
ftallers, and by the privileges of fairs and markets. It has already

beea

THE NATURE AND CAUSES OF

B O O K been obferved in what manner the prohibition of the exportation of
4.— v-*-> corn, together with fome encouragement given to the importation
of foreign corn, obftruiSted the cultivation of antient Italy, naturally
the moft fertile country in Europe, and at that time the feat of
the greateft empire in the world. To what degree fuch reftraints
upon the inland commerce of this commodity, joined to the gene-
ral prohibition of exportation, muft have difcouraged the cul-
tivation of countries lefs fertile, and lefs favourably circumftanced,
it is not perhaps very eafy to imagine.

CHAP. III.

Of the Rife and Progrefs of Cities and TowfiSf after the Fall of

the Roman Empire.

THE inhabitants of cities and towns were, after the fall
of the Roman empire, not more favoured than thofe of
the country. They confifted, indeed, of a very different order of
people from the firfl: inhabitants of the antient repubhcks of Greece
and Italy. Thefe laft were compofed chiefly of the proprietors of
lands, among whom the publick territory was originally divided,
and who found it convenient to build their houfes in the neigh-
bourhood of one another, and to furround them with a wall, for
the fake of common defence. After the fall of the Roman empire,
on the contrary, the proprietors of lands feem generally to have
lived in fortified caftles on their own eftates, and in the midft of
their own tenants and dependants. The towns were chiefly inha-
bited by tradefmen and mechanicks, who feem in thofe days to
liave been of fervile, or very nearly of fervile condition. The pri-
vileges

THE WEALTH OF NATIONS. 481.

vileges which we find granted by antient charters to the inhabitants C HA P.
of fome of tlie principal towns in Europe, fufhciently fhow wliat
tliey were before thofe grants. The people to whom it is granted
as a privilege, that they might give away their own daughters in
marriage without tlie confent of their lord, that upon their death
their own children, and not their lord, fhould fucceed to their
goods, and that they might difpofe of their own effc6ts by will,
muft, before thofe grants, have been either altogether, or very nearly
in tlie fame ^ftate of villanage with the occupiers of land in the
country.

They feem, indeed, to have been a very poor, mean fett of
people, who ufed to travel about with their goods from place to
place, and from fair to fair, like the hawkers and pedlars of the pre-
sent times. In all the different countries of Europe then, in the fame
manner as in feveral of the Tartar governments of Afia at prefent,
taxes ufed to be levied upon the perfons and goods of travellers,
when they paffed through certain manors, when they went over
certain bridges, when they carried about their goods from place to
place in a fair, when they ere6led in it a booth or ftall to fell them
in. Thefe different taxes were known in England by the names of
paffage, pontage, laftage, and ftallage. Sometimes the king,
fometimes a great lord, who had, it feems, upon fome occafions,
authority to do this, would grant to particular traders, to fuch
particularly as lived in their own demefnes, a general exemption
from fuch taxes. Such traders, though in other refpe6ls of fer-
vile, or very nearly of fervile condition, were upon this account
called Free-traders. They in return ufually paid to their pro-
te6lor a fort of annual poll-tax. In thofe days prote6lion was
feldom. granted without a valuable confideration, and this tax
might, perhaps, be confidered as compenfation for what their
patrons might lofe by their exemption from other taxes. At firff.

Vol. I. 3 both

^82 THE NATURE AND CAUSES OF

BOOK both thofe poll-taxes and thofe exemptions feem to have been
-v-^ altogether perfonal, and to have afFe6led only particular indivi-
duals, during either their lives, or the pleafure of their protestors.
In the very imperfed accounts which have been publiflied from
Domefday-book, of feveral of the tovi^ns of England, mention
is frequently made, fometimes of the tax which particular burghers
paid, each of them, either to the king, or to fome other great lord,
for this fort of protection, and fometimes of the general amount
only of all thofe taxes.

But how fervile foever may have been originally the condition
of the inhabitants of towns, it appears evidently, that they arrived
at liberty and independency much earlier than the occupiers of
land in the country. That part of the king's revenue which arofe
from fuch poll-taxes in any particular town, ufed commonly to
be lett in farm, during a term of years for a rent certain, fome-
times to the fherifF of the county, and fometimes to other perfons.
The burghers themfelves frequently got credit enough to be
admitted to farm the revenues of this fort which arofe out
of their own town, they becoming jointly and feverally an-
fwerable for the whole rent. To lett a farm in this manner was
quite agreeable to the ufual oeconomy of, I believe, the fovereigns
of all the different countries of Europe; who ufed frequently to
lett whole manors to all the tenants of thofe manors, they be-
coming jointly and feverally anfwerable for the whole rent ; but in
return being allowed to colle6l it in their own way, and to pay
it into the king's exchequer by the hands of their own baihff, and
being thus altogether freed from the infolence of the king's officers;
a circumftance in thofe days regarded as of the greateft impor-
tance.

THE WEALTH OF NATIONS.

483

At firft, the farm of the town was probably lett to the burghers, C H^A P.
in the fame manner as it had been to other farmers, for a term of u—y-— »
years only. In procefs of time, however, it feems to have be-
come the general practice to grant it to them in fee, that is forever,
referving a rent certain never afterwards to be augmented. The
payment having thus become perpetual, the exemptions, in return
for which it was made, naturally became perpetual too. Thofe
exemptions, therefore, ceafed to be perfonal, and could not after-
wards be confidered as belonging to individuals as individuals, but
as burghers of a particular burgh, which, upon this account,
was called a Free-burgh, for the fame reafon that they had been
called Free-burghers or Free-traders.

Along with this grant, the important privileges above men-
tioned, that they might give away their own daughters in marriage,
that their children fhould fucceed to them, and that they might
difpofe of their own efFe6ls by will, were generally beftowed upon
the burghers of the town to whom it was given. Whether fuch
privileges had before been ufually granted along with the freedom of
trade, to particular burghers, as individuals, I know not. I
reckon it not improbable that they were, though I cannot produce
any dire6l evidence of it. But however this may have been, the
principal attributes of villanage and flavery being thus taken away
from them, they now, at leaft, became really free in our prefent
fenfe of the word Freedom.

Nor was this all. They were generally at the fame time
cre6led into a commonality or corporation, with the privilege of
having magiftrates and a town council of their own, of making
bye laws for their own government, of building walls for their own
defence, and of reducing all their inhabitants under a fort of
military difcipline, by obliging them to watch and ward, that is,

3 0^2 as

484

THE NATURE AND CAUSES OF

BOOK as antiently iinderftood, to guard and defend thofe walls againft all
u-v-— ' attacks and furprifes by night as well as by day. In England
they were generally exempted from fuit to the hundred and
county courts ; and all fuch pleas as fliould arife among them,
the pleas of the crown excepted, were left to the decifion of their
own magift rates. In other countries much greater and more
extenfive jurifdi6lions were frequently granted to them.

It might, probably, be neceflary to grant to luch towns as were
admitted to farm their own revenues, fome fort of compulfive
jurifdiclion to oblige their own citizens to make payment. In thofe
diforderly times it might have been extremely inconvenient to
have left them to feek this fort of juftice from any other tribunal.
But it muft feem extraordinary that the fovereigns of all the different
countries of Europe, fliould have exchanged in this manner
for a rent certain, never more to be augmented, that branch of
their revenue, which was, perhaps, of all others the moft likely
to be improved, by the natural courfe of things, without either ex-
pence or attention of their own : and that they fhould, befides, have
in this manner voluntarily ere6led a fort of independent republicks
in the heart of their own dominions.

In order to underftand this it muft be remembered, that in thofe
days the fovereign of perhaps no country in Europe, was able to
prote£l, through the whole extent of his dominions, the weaker
part of his fubjc£ls from the oppreflion of the great lords. Thofe
whom the law could not prote6f, and who were not flrong
enough to defend themfelves, were obliged either to have recourfe
to the proteftion of fome great lord, and in order to obtain it
to become either his flaves or vaflals ; or to enter into a league
of mutual defence for the common protection of one another.
The inhabitants of cities and burghs, confidered as fingle indi-
viduals,

THE WEALTH OF NATIONS. 48^

viduals, had no power to defend themfelves ; but by entering into C HA P.
a league of mutual defence with their neighbours, they were capable
of making no contemptible refinance. The lords defpifed the
burghers, whom they confidered not only as of a different order,
but as a parcel of emancipated flaves, almoft of a different
fpecies from themfelves. The wealth of the burghers never failed
to provoke their envy and indignation, and they plundered them
upon every occalion without mercy or remorfe. The burghers
naturally hated and feared the lords. The king hated and feared
them too ; but though perhaps he might defpife, he had no reafon
either to hate or fear the burghers. Mutual intereft, therefore,
dilpofed them to fupport the king, and the king to fupport them
againft the lords. They were the enemies of his enemies, and it
was his intereft to render them as fecure and independent of thofe
enemies as he could. By granting them magiftrates of their own,
the privilege of making bye-laws for their own government, that of
building walls for their own defence, and that of reducing all their
inhabitants under a fort of mihtary difciphne, he gave them all
the means of fecurity and independency of the barons which it was
in his power to beftow. Without the eftablilliment of fome 'regular
government of this kind, without fome authority to compel their
inhabitants to act according to forrte certain plan or fyftem, no
voluntary league of mutual defence could either have afforded them
any permanent fecurity, or have enabled them to give the king
any confiderable fupport. By granting them the farm of their town
in fee, he took away from thofe wliom he wifhed to have for his
friends, and^ if one may fay fo, for his allies, all ground of jea-
loufy and fufpicion that he was ever afterwards to opprefs them,
either by raifmg the farm rent of their town, or by granting it
to fome other farmer.

The princes who liv^d upon the worft terms with their barons
feem accordingly to have been the moft liberal in grants of this

I kind

486

THE NATURE AND CAUSES OF

^ ^I? ^ ^'^^'^ ^^^^^^ burghs. King John of England, for example, appears
^ — ^ — ' to have been a moft munificent benefaftor to his towns. Philip
the firft of France loft all authority over his barons. Towards
the end of his reign, his fon Lewis, known afterwards by the name
of Lewis the Fat, confulted, according to father Daniel, with the
bifhops of the royal demefnes, concerning the moft proper means
of retraining the violence of the great lords. Their advice con-
fifted of two different propofals. One was to ereft a new order
of jurildi6tion, by eftabUfhing magiftrates and a town council in
every confiderable town of his demefnes. The other was to form a
new militia, by making the inhabitants of tliofe towns, under the com-
mand of their own magiftrates, march out upon proper occafions to
the affiftance of the king. It is from this period, according to the
French antiquarians, that we are to date the inftitution of the
magiftrates and councils of cities in France. It was during the
unprofperous reigns of the princes of the houfe of Suabia that the
greater part of the free towns of Germany received the firft grants
of their privileges, and that the famous Hanfeatic league firft
became formidable.

The militia of the cities feems, in thofe times, not to have been
inferior to that of the country, and as they could be more readily
aflembled upon any fudden occafion, they frequently had the ad-
vantage in their difputes with the neighbouring lords. In coun-
tries, fuch as Italy and Switzerland, in which, on account
either of their diftance from the principal feat of government, of the
natural ftrength of the country itfelf, or of fome other reafon, the
fovereign came to lofe the whole of his authority, the cities generally
became independent republicks, and conquered all the nobility in
their neighbourhood ; obliging them to pull down their caftles in
the country, and to live, like other peaceable inhabitants, in the
city. This is the ftiort hiftory of the republick of Berne, as well as

THE WEALTH OF NATIONS

of feveral other cities in Switzerland. If you except Venice, for of C
that city the hiftory is fomewhat different, it is the hiftory of all the
confiderable Italian republicks, of which fo great a number arofe and
perifhed, between the end of the twelfth and the beginning of the
fixteenth century.

In countries fuch as France or England, where the authority
of the fovereign, though frequently very low, never was deftroyed
altogether, the cities had no opportunity of becoming entirely in-
dependent. They became, however, fo confiderable that the fove-
reign could impofe no tax upon them, befides the ftated farm rent
of the town, without their own confent. They were, therefore,
called upon to fend deputies to the general affembly of the ftates
of the kingdom, where they might join with the cleigy and the
barons in granting, upon urgent occafions> fome extraordinary aid-
to the king. Being generally too more favourable to his power,
their deputies feem, fometimes, to have been employed by him as
a counter-balance to the authority of the great lords in thofe aifem-
blies. Hence the origin of the reprefentation of burghs in th&
ftates general of all the great monarchies in Europe.

Order and good government, and along with them the liberty
and fecurity of individuals, were, in this manner, eftablifhed in
cities at a time when the occupiers of land in the country were ex^
pofed to every fort of violence. But men in this defencelefs ftate
naturally content themfelves with their necelTary fubfiftence; be-
caufe to acquire mjore might only tempt the injuftice of their op*-
preflbrs. On the contrary, when they are fecure of enjoying the
fruits of their induftry, they naturally exert it to better their con-
dition, and to acquire not only the neceffaries, but the conveniencies
and elegancies of life. That induftry, therefore, which aims st-
fomething more than neceflary fubfiftence, was eftabliftied in cities
long before it was commonly pra<5tifed by the occupiers of land

THE NATUPvE AND CAUSES OF

^ in the country. If in the hands of a poor cultivator, opprelTed
o with the fervitude of villanage, fome little ftock ftiould accumulate,
he would naturally conceal it with great care from his mafter,
to whom it would otherwife have belonged, and take the firft op-
portunity of running away to a town. The law w-as at that time
fo indulgent to the inhabitants of towns, and fo defirous of di-
minifliing the authority of the lords over thofe of the country,
that if he could conceal himfelf there from the purfiiit of his lord
for a year, he was free for ever. Whatever flock, therefore,
accumulated in the hands of the induftrious part of the inhabitants
of the country, naturally took refuge ' in cities, as the only
fan6luaries in which it could be fecure to the perfon that ac-
quired it.

The inhabitants of a city, it is true, muft always ultimately
derive their fubfiftence, and the whole materials and means of their
induftry from the country. But thofe of a city, fituated near either
the fea-coaft or the banks of a navigable river, are not neceflarily
confined to derive them from the country in their neighbourhood.
They have a much wider range, and may draw them from the
moft remote corners of the world, either in exchange for the ma-
nufaftured produce of their own induftry, or by performing the
office of carriers between diftant countries, and exchanging the
produce of one for that of another. A city might in this manner
grow up to great wealth and fplendor, while not only the country
in its neighbourhood, but all thofe to which it traded, were in
poverty and wretchednefs. Each of thofe countries, perhaps, taken
fmgly, could afford it but a fmall part, either of its fubfiftence, or of
its employment; but all of them taken together could afford it both
a great fubfiftence and a. great employment. There were, how-
ever, within the narrow circle of the commerce of thofe times,
fome countries that were opulent and induftrious. Such was the

7, Greek

THE WEALTH OF NATIONS.

489

Greek empire as long as it fubfifted, and that of the Saracens during C H^A P.
the reigns of the Abaflides. Such too was Egypt till it was con- c^^r-^
quered by the Turks, fome part of the coaft of Barbary, and all
thofe provinces of Spain which were under the government of th^
Moors.

The cities of Italy feem to have been the firft in Europe which
were raifed by commerce to any confiderable degree of opulence.
Italy lay in the center of what was at that time the improved
and civilized part of the world. The Cruzades too, though by
the great wafte of ftock and deftru6lion of inhabitants which they
occafioned, they muft neceflarily have retarded the progrefs of the
greater part of Europe, were extreamly favourable to that of fome
Italian cities. The great armies which marched from all parts
to the conqueft of the holy land, gave extraordinary encouragement
to the fhipping of Venice, Genoa, and Pifa, fometimes in tranfport-
ing them thither, and always in fupplying them v/ith provifions.
They were the commiflaries, if one may fay fo, of thofe armies
and the moft deftru6live frenzy that ever befel the European nations,
was a fource of opulence to thofe republics.

The inhabitants of trading cities, by importing the improved
manufactures and expenfive luxuries of richer countries, afforded
fome food to the vanity of the great proprietors, who eagerly pur-
chafed them with great quantities of the rude produce of their own
lands. The commerce of a great part of Europe in thofe times
accordingly, confifted chiefly in the exchange of their own rude,
for the manufa6i:ured produce of more civilized nations. Thus
the wool of England ufed to be exchanged for the wines of France,
and the fine cloths of Flanders, in the fame manner as the corn
of Poland is at this day exchanged for the wines and brandies of
France, and for the filks and velvets of France and Italy.

Vol. I. 3 R A taste

.90 THE NATURE AND CAUSES OF

BOO K . rA^TASTE for the finer and more improved manufa6lures, was m
V—v--— ' this manner introduced by foreign commerce into countries where
no fuch works were carried on. But when this tafte became fo
general as to occafion a confiderable demand, the merchants, in
order to fave the expence of carriage, naturally endeavoured to
eftablifh fome manufa6lures of the fame kind in their own country.
Hence the origin of the firft manufactures for diftant fale that
feem to have been eftablilhed in the weftern provinces of Europe,
after the fall of the Roman empire.

No large country, it muft be obfeived, ever did or could fubfift
without fome fort of manufa6lures being carried on in it j and when
it is faid of any fuch country that it has no manufa6lures, it muft
always be underftood of the finer and more improved, or of fuch
as are fit for diftant fale. In every large country, both the cloath-
ing and houfhold furniture of the far greater part of the people,
are the produce of their own induftry. This is even more univer-
fally the cafe in thofe poor countries which are commonly faid to
have no manufa6lures, than in thofe rich ones that are faid to
abound in them. In the latter, you will generally find, both in the
cloaths and houfhold furniture of the lowelt rank of people, a
much greater proportion of foreign productions than in the
former.

Those manufa6tures which are fit for diftant fale, feem to have
b^en introduced into different countries in two. different ways.

Sometimes they have been introduced, in the manner above
mentioned, by the violent operation, if one may fay fo, of the
flocks of particular merchants and undertakers, who eftabliftied
them in imitation of fome foreign manufactures of the fame
kind. Such manufactures, therefore, are the offspring of foreign

commerce.

THE WEALtH OF NATIONS.

commerce, and fuch feem to have been the antient manufa«5lures C FI A P.
of filks, velvets, and brocades that were introduced into Venice v.^^^^
in the beginning of the thirteenth century. Such too feem to have
been the manufaflures of fine cloths that antiently flouriflied in
Flanders, and which were introduced into England in the beginning
of the reign of Elizabeth ; and fuch are the prefent filk manu-
factures of Lyons and Spital-fields. Manufactures introduced in
this manner are generally employed upon foreign materials, being
in imitations of foreign manufactures. When the Venetian
manufacture flourifhed, there was not a mulberry tree, nor confe-
quently a filkworm in all Lombardy. They brought the materials
from Sicily and from the Levant, the manufacture itfelf being in
imitation of thofe carried on in the Greek empire. Mulberry
trees were firft planted in Lombardy in the beginning of the fix-
teenth century, by the encouragement of Ludovico Sforza duke
of Milan. The manufactures of Flanders were carried on chiefly
with Spanifli and Englifli wool. Spanifh wool was the material,
not of the firft woollen manufacture of England, but of the firft
that was fit for diftant fale. More than one half the materials of
the Lyons manufacture is at this day foreign filk ; when it was
firft eftabliftied, the whole or very nearly the whole was fo. No
part of the materials of the Spital-fields manufacture is ever likely
to be the produce of England. The feat of fuch manufactures,
as they are generally introduced by the fcheme and projeCt of a few
individuals, is fometimes eftabliftied in a maritime city, and fome-
times in an inland town, according as their intereft, judgement or
caprice happen to determine.

At other times manufactures for diftant fale grow up naturally,
and as it were of their own accord, by the gradual refinement of
thofe houftiold and coarfer manufactures which muft at all times
be carried on even in the pooreft and rudeft countries. Such

3 R 2 manufactures

492

THE NATURE AND CAUSES OF

B OO K manufa6lures are generally employed upon the materials whicfr
1^^-^ the country produces, and they feem frequently to have been firft
refined and improved in fuch inland countries as were, not indeed
at a very great, but at a confiderable diftance from the fea coaft,
and fometimes even from all water carriage. An inland country
naturally fertile and eafily cultivated, produces a great furplus of-
provifions beyond what is neceflary for maintaining the cultivators,,
and on account of the expence of land carriage, and inconveniency
of river navigation, it may frequently be difficult to fend this fur-
plus abroad. Abundance, therefore, renders provifions cheap>-
and encourages a great number of workmen to fettle in the neigh-
bourhood, who find that their induftry can there procure them-
more of the neceffaries and conveniencies of life than in other-
places. They work up the materials of manufa6lure which the
land produces,, and exchange their finifhed work, or what is the-
fame thing the price of it, for more materials and provifions. They
give a new value to the furplus part of the rude produce by faving^
the expence of carrying it to the water fide or to fome diftant market ;
and they furnifh the cultivators with fomething in exchange for
it that is either ufeful or agreeable to them, upon eafier terms than-
they could have obtained it before. The cultivators get a better
price for their furplus produce, and can purchafe cheaper other
conveniencies which they have occafion for^ They are thus both-
encouraged and enabled to increafe this furplus produce by a further-
improvement and better cultivation of the land ; and as the fer-
tility of the land had given birth to the manufacture, fo the pro-
grefs of the manufacture re-aCls upon the land, and increafes ftill'
further its fertility. The manufacturers firft fupply the neigh-
bourhood, and afterwards, as their work improves and refines, more
diftant markets. For though neither the rude produce, nor everk
the coarfe manufaClure could, without the greateft difficulty, fup-
port the expence of a confiderable land carriage, the refined and
4 improved.

THE WEALTH OF NATIONS.

493

improved manufafluie eafily may. In a ftnall bulk it frequently C H^A P.
contains the price of, a, great quantity of rude produce. Apiece u —
of fine cloth, for example, which weighs only eighty pounds, con-
tains in it, the price, not only of eighty pounds weight of wool,,
but fometimes of feveral thoufand weight of com, the maintenance
of the different working people, and of their immediate employers.
The corn which could- with difficulty have been carried abroad in
its own fhape, is in this manner virtually exported in that of the
complete manufadlure, and may eafily be fent to the remoteft.
corners of the world. In this manner have grown up naturally,
and as it were of their own accord, the manufadtures of Leeds,
Halifax, Sheffield, Birmingham, and Wolverhampton. Such.
manufa6lures are the offspring of agriculture. In the modern
hiflory of Europe, their extenfion and improvement have generally
been poflerior to thofe which were the offspring of foreign com-
merce. England was noted for the manufa6lure of fine cloths made
of Spanifh wool, more than a century before any of thofe wliich now
flourifh in the places above mentioned were fit for foreign fale. The
extenfion and improvement of thefe lafl could not take place but in
confequence of the extenfion and improvement of agriculture,,
the laft and greatefl effed: of foreign commerce, and of the manu-
fa61:ures immediately introduced by it, and which I fhall now pro-
ceed to explain..

T^E NATURE AND CAUSES OF

C H A P. IV.

Mow the Commerce of the 'Towns contributed to the Improvement of

the Country.

THE increafe and riches of commercial and manufacturing
towns, contributed to the improvement and cultivation of
the countries to which they belonged, in three different ways.

First, by affording a great and ready market for the rude
produce of the country, they gave encouragement to its cultivation
and further improvement. This benefit was not even confined to
the countries in which they were fituated, but extended more or lefs
to all thofe with which they had any deahngs. To all of them
they afforded a market for fome part either of their rude or manu-
faflured produce, and confequently gave fome encouragement to
the induftry and improvement of all. Their own country, hov/-
ever, on account of its neighbourhood, neceffarily derived the greateft
benefit from this market. Its rude produce being charged with
lefs carriage, the traders could pay the growers a better price for it,
and yet afford it as cheap to the confumers as that of more diftant
countries.

Secondly, the wealth acquired by the inhabitants of cities was
frequently employed in purchafing fuch lands as were to be fold,
of which a great part would frequently be uncultivated. Mer-
chants are commonly ambitious of becoming country gentlemen,
and when they do, they are generally the beft of all improvers. A
merchant is accuftomed to employ his money chiefly in profitable
projects; whereas a mere country gentleman is accuftomed to

employ

THE WEALTH OF NATIONS.

495^

employ it chiefly in expence. The one often fees his money go C HA P.
from him and return to him again with a profit : The other when ^ —
once he parts with it, very feldom expe6ls to fee any more of it.
Thofe different habits naturally affed-^their temper and difpofition
in every fort of bufmefs. A merchant is commonly a bold; a
country gentleman, a timid undertaker. The one is not afraid
to lay out at once a large capital upon the improvement of his
land, when he has a probable pro(jpe6l of raifmg the value of it in
proportion to the expence. The other, if he has any capital,
which is not always the cafe, feldom ventures to employ it in this
manner. If he improves at all, it is commonly not with a capital,
but with what he can fave out of his annual revenue. Whoeveu
has had the fortune to live in a mercantile town fituated in an un-
improved country, muft have frequently obferved hov/ much more
fpirited the operations of merchants were in this way, than thofe of
mere country gentlemen. The habits, befides, of order, ceconomy
and attention, to which mercantile bufmefs naturally forms a
merchant, render him much fitter to execute, with profit and
fuccefs, any project of improvement.

Thirdly, and laftly^ commerce and manufa6lures gradually
introduced order and good government, and with them, the liberty
and fecurity of individuals, among the inhabitants of the country^,
who had before lived almoft in a continual ftate of war with their
neighbours, and of femle dependency upon their fuperiors. This,
though it has been the leaft obferved, is by far the mofl important
of all their effects. Mr. Hume is the only writer who, fo.far as
I know, has hitherto taken notice of it.

In a country which has neither foreign commerce, nor any of the
finer manufatlures, a great proprietor, having nothing for which he:
can exchange the greater part of the produce of his lands which is
over and above the maintenance of the cultivators, confumes the
7 whole

4^6

THE NATURE AND CAUSES OF

B O O K v/hok ill ruftick hofpitality at home. If this furplus produce is fuf-
u-'v-— ^ ficieiit to maintain a hundred or a thoufand men, he can make ufe of
it in no other way than by maintaining a hundred or a thoufand men.
He is at all times, therefore, furrounded with a multitude of
retainers and dependants, who having no equivalent to give in
return for their maintenance, but being fed entirely by his bounty,
muft obey him, for the fame reafon that foldiers muft obey the
prince who pays them. Before the extenfion of commerce and
manufa6tures in Europe, the hofpitality of the rich and the great,
from the fovereign down to the fmalleft baron, exceeded every thing
which in the prefent times we can eafily form a notion of. Weft-
minfter hall was the dining room of William Rufus, and might
frequently, perhaps, not be too large for his company. It was
reckoned a piece of magnificence in Thomas Becket, that he
ftrowed the floor of his hall with clean hay or rufhes in the feafbn,
in order that the knights and fquires, who could not get feats, might
not fpoil their fine cloaths when they fat down on the floor to eat
their dinner. The great earl of Warwick is faid to have entertained
every day at his different manors, thirty thoufand people ; an4
though the number here may have been exaggerated, it muft, how-
ever, have been very great to admit of fuch exaggeration. A hof-
pitality nearly of the fame kind was exercifed not many years ago
in many different parts of the highlands of Scotland. It feems
to be common in all nations to whom commerce and manufaflures
are little known. I have feen, fays Doflor Pocock, an Arabian
chief dine in the ftreets of a town where he had come to fell his
cattle, and invite all paffengers, even common beggars, to fit down
with him and partake of his banquet.

The occupiers of land were in every refpe61: as dependent upon
the great proprietor as his retainers. Even fuch of them as were
not in a ftate of villanage, were tenants at will, who paid a rent

THE WEALTH OF NATIONS. 49;

In no refpe<5l equivalent to the fubfiftence w^hich the land afforded CHAP,
them. A crown, half a crown, a fheep, a lamb, was fome years u.— /-^
ago in the highlands of Scotland a common rent for lands which
maintained a family. In fome places it is fo at this day ; nor will
money at prefent purchafe a greater quantity of commodities there
than in other places. In a country where the furplus produce of
a large eftate muft be confumed upon the eftate itfelf, it will fre-
quently be more convenient for the proprietor, that part of it be
confumed at a diftance from his own houfe, provided they who
confume it are as dependant upon him as either his retainers or
his menial fervants. He is thereby faved from the embarraffment
of either too large a company or too large a family. A tenant
at will, who poflefTes land fufficient to maintain his family for little
more than a quit- rent, is as dependant upon the proprietor as any
fervant or retainer whatever, and muft obey him with as little
referve. Such a proprietor, as he feeds his fervants and retainers
at his own houfe, fo he feeds his tenants at their houfes. The
fubfiftence of both is derived from his bounty, and its continuance
depends upon his good pleafure.

Upon the authority which the great proprietors necelTarily
had in fuch a ftate of things over their tenants and retainers, was
founded the power of the antient barons. They neceflarily became
the judges in peace, and the leaders in war, of all who dwelt
upon their eftates. They could maintain order and execute the
law within their refpeftive demefnes, becaufe each of them could
there turn the whole force of all the inhabitants againft the injuftice
of any one. No other perfon had fufficient authority to do this.
The king in particular had not. In thofe antient times he was
little more than the greateft proprietor in his dominions, to
whom for the fake of common defence againft their common ene-
mies, the other great proprietors paid certain refpefts. To have
enforced payment of a fmall debt within the lands of a great pro-

Vol. I. 3 S prietor.

498

THE NATURE AND CAUSES OF

BOOK prietor, where all the inhabitants were armed and accuftomed to
Ui^y-^ ftand by one another, would have coft the king, had he attempted
it by his own authority, almoft the fame effort as to extinguifli
a civil war. He was, therefore, obliged to abandon the adminif-
tration of juftice through the greater part of the country, to thofe
who were capable of adminiftering it; and for the fame reafon to
leave the command of the country militia to thofe whom that
militia would obey.

It is a miftake to imagine that thofe territorial jurifdiclions took
their origin from the feudal law. Not only the highefl jurifdidions
both civil and criminal, but the power of levying troops, of coin-
ing money, and even that of making bye-laws for the government
of their own people, were all rights pofTefled allodially by the great
proprietors of land feveral centuries before even the name of the
feudal law was known in Europe. The authority and jurifdi6lion
of the Saxon lords in England, appears to have been as great before
the conqueft, as that of any of the Norman lords after it. But
the feudal law is not fuppofed to have become the common kw
of England till after the conquefl. That the moft extenfive au-
thority and jurifdiftions were pofTeffed by the great lords in France
allodially long before the feudal law was introduced into that
country, is a matter of fa6l that admits of no doubt. That au-
thority and thofe jurifdi6lions all neceffarily flowed from the flate
of property and manners juft: now defcribed. Without remount-
ing to the remote antiquities of either the French or Englifh
monarchies, we may find in much later times many proofs that fuch
effefts muft always flow from fuch caufes. It is not thirty years, ago
fmce Mr. Cameron of Lochiel, a gentleman of Lochabar in Scot-
land, without any legal warrant whatever, not being what was then
called a lord of regality, nor even a tenant in chief, but a vaffal of
the duke of Argylle, and without being fo much as a juftice of

peace,

THE WEALTH OF NATIONS.

499

peace, ufed, notvvithftanding, to exercife the higheft criminal jurlf- C ^^P*
di(5lion over his own people. He is faid to have done fo with ^c-^
great equity, though without any of the formalities of jullice ; and
it is not improbable that the ftate of that part of the country
at that time made it necelfary for him to aflume this authority in
order to maintain the publick peace. That gentleman, whofe rent
never exceeded five hundred pounds a year, carried, in 1745,
eight hundred of his own people into the rebellion with him.

The introdu6lion of the feudal law, fo far from extending, may
be regarded as an attempt to moderate the authority of the great
allodial lords. It eftablifhed a regular fubordination, accompanied
with a long train of fervices and duties, from the king down to
the fmalleft proprietor. During the minority of the proprietor,
the rent, together with the management of his lands, fell into the
hands of his immediate fuperior, and, confequently, thofe of all
great proprietors into the hands of the king, w^ho was charged
with the maintenance and education of the pupil, and who, from
his authority as guardian, was fuppofcd to have a right of dif-
pofing of him in marriage, provided it was in a manner not un-
fuitable to his rank. But though this inftitution neceffarily tended
to ftrengthen the authority of the king, and to weaken that of
the great proprietors, it could not do either fufficiently for eftablifli-
ing order and good government among the inhabitants of the
country ; becaufe it could not alter fufficiently that ftate of
property and manners from which the diforders arofe. The
authority of government ftill continued to be, as before, too weak
in the head and too ftrong in the inferior members, and the
excefiive ftrength of the inferior members was the caufe of the
weaknefs of the head. After the inftitution of feudal fubordi-
nation, the king was as incapable of reftraining the violence of
the great lords as before. They ftill continued to make war ac-

3 S 2 cording

50Q

THE NATURE AND CAUSES OF

B O O K cording to their own difcretion, almoft continually upon one another,
w»-yw and very frequently upon the king; and the open country flill
continued to be a fcene of violence, rapine, and diforder.

But what all the violence of the feudal inftitutions could never
have efte(5led, the fUent and infenfible operation of foreign commerce
and manufactures gradually brought about. Thefe gradually fur-
niflied the great proprietors with fomething for which they could
exchange the whole furplus produce of their lands, and which they
could confume themfelves without fharing it either with tenants or
retainers. All for ourfelves, and nothing for other people, feems, in
every age of the world, to have been the vile maxim of the maflers of
mankind. As foon, therefore, as they could find a method of con-
fuming tlie whole value of their rents themfelves, they had no dif-
pofuion to fnare them with any other perfons. For a pair of diamond
buckles perhaps, or for fomething as frivolous and ufelefs, they
exchanged the maintenance, or what is the fame thing, the price of
the maintenance of a thouland men for a year, and with it the
whole weight and authority which it could give them. The buckles>
however, were to be all their own, and no other human creature
was to have any fhare of them ; whereas in the more antient
method of expence they muft have fhared with at leaft a thoufand.
people. With the judges that were to determine the preference*
this difference was perfectly decifive; and thus, for the gratification
of the moft childifli, the meaneft and the moil fordid of alt
vanities, they gradually bartered their whole power and authority.

In a country where there is no foragn commerce, nor any of the
finer manufa^ures, a man of ten thoufand a y«ar cannot well
employ his revenue in any other way than in maintaining, perhaps,
a thoufand families, who are all of them neceffarily at his com-
mand. In the prefent ilate of Europe, a man of ten thoufand a
year can fpend his whole revenue, and he generally does fo, with-
out

THE WEALTH OF NATIONS.

out dire6tly maintaining twenty people, or being able to command C HA P.
more than ten footmen not worth the commanding. Indirectly, \^ l^mj
perhaps, he maintains as great or even a greater number of people
than he could have done by the antient method of expence. For
though the quantity of precious productions for which he ex-
changes his whole revenue be very fmall, the number of workmen
employed in collecting and preparing it, muft neceflarily have been
very great. Its great price generally arifes from the wages of their
labour, and the profits of all their immediate employers. By
paying that price he indireCtly pays all thofe wages and profits,,
ami thus indireCtly contributes to the maintenance of all the work-
men and their employers. He generally contributes, however,
but a very fmall proportion to that of each, to very few perhaps
a tenth, to many not a hundredth, and to fome not a thoufandtb
nor even a ten thoufandth part of their whole annual maintenance.
Though he contributes, therefore, to the maintenance of them all,,
they are all more or lefs independant of him, becaufe generally:
they can ail be maintained without him.

When the great proprietors of land fpend their rents in main-
taining their tenants and retainers, each of them maintains entirely
all his own tenints and all his own retainers. But when they fpend
them in maintaining tradefmen and artificers, they may, all of them
taken together, perhaps, maintain as great, or, on account of the
wafte which attends ruftick hofpitality, a greater nvimber of people
than before. Each of them, however, taken fingly, contributes often
but a very fmall fhare to the maintenance of any individual of this
greater number. Each tradefman or artificer derives his fubfiftence
from the employment, not of one, but of a hundred or a thoufand
different cuftomers. Though in fome meafure obliged to them
all, therefore, he is not abfolutely dependant upon any one of
them«.

The

THE NATURE AND CAUSES OF

The perfonal expence of the great proprietors having in this
manner gradually increafed, it was impolTible that the number of their
retainers fhould not as gradually diminifh, till they were at laft
difmiffed altogether. The fame caufe gradually led them to difmifs
the unneceiTary part of their tenants. Farms were enlarged, and the
occupiers of land, notwithftanding the complaints of depopulation,
reduced to the number neceffary for cultivating it according to the
imperfect ftate of cultivation and improvement in thofe times.
By the removal of the unneceflary mouths, and by exacting from
the farmer the full value of the farm, a greater furplus, or what
is the fame thing, the price of a greater furplus, was obtained for
the proprietor, which the merchants and manufacturers foon fur-
niflied him with a method of fpending upon his own perfon in the
fame manner as he had done the reft. The fame caufe continu-
ing to operate, he was deflrous to raife his rents above what his
lands, in the a6lual ftate of their improvement, could afford. His
tenants could agree to this upon one condition only, that they
fliould be fecured in their polfeffion, for fuch a term of years as
might give them time to recover with profit whatever they fhould
lay out in the further improvement of the land. The expenfive
vanity of the landlord made him willing to accept of this condition j
and hence the origin of long leafes.

Even a tenant at will, who pays the- full value of the land, is
not altogether dependent upon the landlord. The pecuniary ad-
vantages which they receive from one another, are mutual and
equal, and fuch a tenant will expofe neither his life nor his fortune
in the fervice of the proprietor. But if he has a leafe for a long
term of years, he is altogether independent ; and his landlord muft
not expe6t from him even the moft trifling fervice beyond what is
either exprefily ftipulated in the leafe, or impofed upon him
by the common and knov^'n law of the country,

Thp

THE WEALTH OF NATIONS.

The tenants having in this manner become independent, and

the retainers being difmifTed, the great proprietors were no longer

capable of interrupting the regular execution of juftice, or of dif-
turbing the peace of the country. Having fold their birth-right,,
not like Efau for a mefs of pottage in time of hunger and neceffity,
but in the wantonnefs of plenty, for trinkets and baubles fitter
to be the play-things of children, than the ferious purfuits of
men, they became as infignificant as any fubftantial burgher or
tradefman in a city. A regular government was eftabli(hed in
the country as well as in the city, nobody having fufficient power
to diflurb its operations in the one, any more than in the other.

It does noty perhaps, relate to the prefent fubje6t, but I cannot
help remarking it, that very old families, fuch as have pofTefled
fome confiderable eftate from father to fon for many fucceffive
generations, are very rare in commercial countries. In countries
which have little commerce, on the contrary, fuch as Wales or
the highlands of Scotland, they are very common. The Arabian
hiftories feem to be all full of genealogies, and there is a hiftory
written by a Tartar Khan which has been tranflated into feveral.
European languages, and which contains fcarce any thing elfe ;
a proof that antient families are very common among thole
nations. In countries where a rich man can fpend his revenue in
no other way than by maintaining as many people as it can main-
tain, he is not apt to run out, and his benevolence it feems is
feldom fo violent as to attempt to maintain more than he can
afford. But where he can fpend the greateft revenue upon his
own perfon, he freq^uently has no bounds to his expence, becaufe
he frequently has no bounds to his vanity, or to. his affedtion for
his own perfon. In commercial countries, therefore, riches, in
fpite of the moft violent regulations of law to prevent their diffi-
pation, very feldom remain long in the fame family. Among

limple

THE NATURE AND CAUSES OF

K. fimple nations, on the contrary, they frequently do without any
^ regulations of law j for among nations of ftiepherds, fuch as the

Tartars and Arabs, the confumable nature of their property necef-

farily renders all fuch regulations impoflible.

A REVOLUTION of the greateft importance to the publick hap-
pinefs, was in this manner brought about by two different orders
of people, who had not the leaft intention to ferve the public.
To gratify the moft childifh vanity was the fole motive of the
great proprietors. The merchants and artificers, much lefs ridi-
culous, a6led merely from a view to their own intereft, and in
purfuit of their own pedlar principle of turning a penny wherever
a penny was to be got. Neither of them had either knowledge or
forefight of that great revolution which the folly of the one, and
the induftry of the other was gradually bringing about.

It is thus that through the greater part of Europe the commerce
and manufa6tures of cities, inftead of being the effefl, have been
the caufe and occafion of the improvement and cultivation of the
country.

This order, however, being contrary to the natural courfe
of things, is necelfarily both flow and uncertain. Compare the
flow progrefs of thofe European countries of which the wealth
depends very much upon their commerce and manufaflures,
with the rapid advances of our North American colonies, of
which the wealth is founded altogether in agriculture. Through
the greater part of Europe, the number of inhabitants is not fup-
pofed to double in lefs than five hundred years. In feveral of our
North American colonies, it is found to double in twenty or five
and twenty years. In Europe, the law of primogeniture, and per-
petuities of different kinds, prevent the divifion of great eflates,
7 and

THE WEALTH OF NATIONS,

505

s^nd thereby hiiider, the multiplication of fmall proprietors. A ^ H^A P.
iinall proprietor, however, who knows every part of his little v->— v—
territory, who views it all with the affection which property,
efpecially fmall property, naturally infpires, and who upon that
. account takes pleafure not Only in cultivating but in adorning it,
is generally of all improvers the moft induftrious, the moft intelli-
gent, • and the mofl fuccefsful. The fame regulations, befides,
keep fo much land out of the market, that there are always more
capitals to buy than there is land to fell, fo that what is fold always
fells at a monopoly price. The rent never pays the intereft of the
purchafe money, and is befides burdened with repairs and other
occafional charges, to wliich the intereft of money is not liable.
To purchafe land is every where in Europe a moft unprofitable
^employment of a fmall capital. For the fike of the fuperior fecu-
rity, indeed, a mari of moderate circumftances, when he retires
from bufmefs, will fometimes chufe to lay out his little capital in
J[gn4» -A man of profeflion too, whofe revenue is derived from
another fource, often loves to fecure his favings in the fame way.
But a young man, who, inftead of applying to trade or to fome
profelHon, fhould employ a capital of two or three thoufand
pounds in the purchafe and cultivation of a fmall piece of land,
pijght indeed expert to Uve very happily, and very independently,
but muft bid adieu, forever, to all hope of either great fortune
or great illuftration, which by a different employment of his
ftock he might have had the fame chance of acquiring with other
people. Such a perfon too, though he cannot afpire at being a
proprietor, will often difdain to be a farmer. The fmall quantity
of land, therefore, which is brought to market,' and the high
price of what is brought, prevents a great number of capitals from
being employed in its cultivation and improvement which would
other wife have taken that dire6Hon. In North America, on the
contrary, fifty or fixty pounds is often found a fufHcient ftock
- Vol. I. 3 T to

-o6 THE NATURE AND CAUSES OF

BOOK to begin a plantation with. The purchafe and improvement of
w^^i^ uncultivated land, is there the moft profitable employment of
the fmalleft as well as of the greateft capitals, and the moft direft
road to all the fortune and illuftration which can be acquired in
that country. Such land, indeed, is in North America to be
had almoft for nothing, or at a price much below the value of
the natural produce; a thing impoflible in Europe, or, indeed,
in any country where all lands have long been piivate property.
If landed eftates, however, were divided equally among all the
children, upon the death of any proprietor who left a numerous
family, the eftate would generally be fold. So much land would
come to market, that it could no longer fell at a monopoly price.
The free rent of the land would go nearer to pay the intereft of
the purchafe money, and a fmall capital might be employed in pur-
chafing land as profitably as in any other way.

England, on account of the natural fertility of the foil, of the
great extent of fea coaft in proportion to that of the whole country,
and of the many navigable rivers which run through it, and afford
the conveniency of water carriage to Ibme of the moft inland parts
of it, is perhaps as well fitted by nature as any large country in
Europe, to be the feat of foreign commerce, of manufa6hires for
diftant fale, and of all the improvements which thefe can occafion.
From the beginning of the reign of Elizabeth too, the Englifh
legiflature has been peculiarly attentive to the interefts of commerce
and manufa6tures, and in reality there is no country in Europe,
Holland itfelf not excepted, of which the law is upon the whole
more favourable to this fort of induftry. Commerce and manu*
fa6lures have accordingly been continually advancing during all
this period. The cultivation and improvement of the country
has, no doubt, been gradually advancing too: But it leems to
have followed flowly, and at a diftance, the more rapid progrefs of

commerce

THE WEALTH OF NATIONS. 50;

commerce and maunfadares. The greater part of the country C TI A P.
muft pcobaWy have been cultivated before the reign of Elizabeth ; u-v^'
ami a very great part of it ftill remains uncultivated, and the
cultivation of the far greater part much inferior to v^rhat it might
be. The kw of England, however,, favours agriculture not only
indirectly by the protection of commerce, but by feveral diredl
encouragements. Except in times of fcarcity, the exportation of
corn is not only free, but encouraged by a bounty. In times of
moderate plenty, the importation of foreign corn is loaded with
duties tliat amount to a prohibition. The importation of live
cattle, except from Ireland, is prohibited at all times, and it is but of
late that it was permitted from thence. Thofe who cultivate the land,
therefore, have a monopoly againfl: their countrymen for the two
gueatefi and moft important articles of land-produce, bread and
butcher's meat. Thefe encouragements, though at bottom, perhaps,
as I fliall endeavour to fhow hereafter, altogether illufory, fufficiently
demonftrate at leaft the good intention of the legiflature to favour
agriculture. But what is of much more importance than all of them,
the yeomanry of England are rendered as fecure, as independent,
and as refpeftable as law can make them. No countiy, therefore^
in which the right of primogeniture takes place, which pays tithes,
and where perpetuities, though contrary to the fpirit of the law, are
admitted in fome cafes, can give more encouragement to agriculture
than England. Such, however, notwithftanding, is the ftate of
its cultivation. What would it have been, had the law given no
dired encouragement to agriculture befides what arifes indireftly
from the progrefs of comn>,rce, and had left the yeomanry in
the fame condition as in m.oft other countries of Europe ? It is
now more than two hundred years fmce the beginning of the reign
of Elizabeth, a period as long as the courfe of human profperity
ufually endures*

3 T a

France

THE NATURE AND CAUSES OF

^ France feems to have had a confiderable fhare of foreign com-
•J merce near a century before England was diftinguiflied as a com-
mercial country. The marine of France was confiderable,
according to the notions of the times, before the expedition of
Charles the Vlllth to Naples. The cultivation and improvement
of France, however, is, upon the whole, inferior to that of
England. The law of the country has never given the fame
direct encouragement to agriculture.

The foreign commerce of Spain and Portugal to the other
parts of Europe, though chiefly carried on in foreign (hips, is
very confiderable. That to their colonies is carried on in their own,
and is much greater, on account of the great riches and extent
of thofe colonies. But it has never introduced any confiderable
manufaftures for diftant fale into either of thofe countries, and
the greater part of both ftill remains uncultivated. The foreign
commerce of Portugal is of older ftanding than that of any great
country in Europe, except Italy.

Italy is the only great country of Europe which feems to
have been cultivated and improved in every part, by means of
foreign commerce and manufa6lures for diflant fale. Before the
invafion of Charles the Vlllth, Italy, according to Guicciardin,.
was cultivated not lefs in the moft mountainous and barren parts-
of the country, than in the plaineft and moft fertile. The ad-
vantageous fituation of the country > and the great number of
independent ftates which at that time fubfifted in it, probably
contributed not a little to this general cultivation. It is not
impoffible too, notvvithflanding this general expreffion of one
of the moft judicious and referved of modern hiftorians, that

Italy

THE WEALTH OF NATIONS. 50^

Italy was' not at that time better cultivated than England is at C HA P.
prefent. u^'^^ *

The capital, however, that is acquired to any country by com-
merce and manufa6lures, is all a very precarious and uncertain
pofleffion, till fome part of it has been fecured and realized in the
cultivation and improvement of its lands. A merchant, it has
been faid very properly, is not neceffarily the citizen of any par-
ticular country. It is in a great meafure indifferent to him from
what place he carries on his trade ; and a very trifling difguft will
make him remove his capital, and together with it all the induftry
which it fupports, from one country to another. No part of it
can be faid to belong to any particular country, till it has been
fpread as it were over the face of that country, either in buildings, or
in the lafting improvement of lands. No veftige now remains of the
great wealth, faid to have been pofleffed by the greater part of
the Hans towns, except in the obfcure hiflories of the thirteenth
and fourteenth centuries. It is even uncertain where fome of them
were fituated, or to what towns in Europe the Latin names given
to fome of them belong. But though the misfortunes of Italy
in the end of the fifteenth and beginning of the fixteenth cen-
turies greatly diminiflied the commerce and manafaftures of the
cities of Lombardy and Tufcany, thofc ecountries ftill continue
to be among the moft populous and bed cultivated in Europe.
The civil wars of Flanders, and the Spanifh government which
fucceeded them, chafed away Jie great commerce ot Antwerp,
Ghent, and Bruges. But Flanders ftill continues to be one of
the richeft, belt cultivated, and moft populous provinces of
Europe. The ordinary revolutions of war and government eafily
dry up the fources of that wealth which arifes from commerce
only. That which arifes from the more folid improvements of

y agriculture^

THE NATURE AND CAUSES, &c.

B ^^p K agjiicultvu*e, Is much more durable, and cannot^be deftroyed but
u^-'^'^'-'J by thofe more violent convulfions occafioned by the depredations
of hoftile and barbarous nations continued for a century or two
together ; fuch as thofe that happened for fome tinve before aud
after the falj of the Roman empire ia the weftern provinces of
Europe,

EiiB of the First Volvmr*

•

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Full text of "An inquiry into the nature and causes of the wealth of nations"

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